Builders Risk Application
A Builder’s Risk Insurance policy, also known as Course of Construction insurance, is a specialized type of property insurance designed to cover buildings under construction. It provides coverage for various risks associated with the construction process, protecting the project, materials, and equipment from potential losses or damages.
Key Coverages in a Builder’s Risk Insurance Policy:
- Property Under Construction:
- Covers the building or structure being constructed, renovated, or remodeled.
- Includes coverage for materials, fixtures, and supplies that are part of the construction project.
- Materials and Equipment:
- Covers construction materials, supplies, and equipment on-site, in transit, or temporarily stored off-site.
- Protects against damage or theft of these materials.
- Perils Covered:
- Common perils include fire, lightning, windstorms, theft, vandalism, and explosion.
- May also cover damages from hail, vehicle collision, and other unexpected events.
- Soft Costs:
- Covers additional expenses that arise due to delays caused by a covered loss.
- Examples include architectural fees, legal expenses, and interest on loans.
- Business Income and Extra Expense:
- Covers loss of income and extra expenses incurred if construction is delayed due to a covered loss.
- Helps manage financial impact during the recovery period.
- Debris Removal:
- Covers the cost of removing debris from the construction site after a covered loss.
- Change Orders:
- May cover the cost of change orders that are required to repair or replace damaged parts of the project.
- Testing Coverage:
- Covers damage to the building or structure during testing phases, such as testing of electrical or mechanical systems.
Exclusions:
While Builder’s Risk Insurance provides broad coverage, there are typical exclusions such as:
- Earthquake, flood, and other natural disasters unless specifically added to the policy.
- Acts of war or terrorism
- Wear and tear, rust, corrosion, and deterioration.
- Contractor’s faulty workmanship, materials, or design (though some policies may offer limited coverage for resulting damage).
Policy Duration:
The policy is usually effective from the start of the construction project until the building is completed and ready for use. Coverage will end at a specific point, such as when the project is completed, the owner takes possession, or the building is occupied.
In summary, a Builder’s Risk Insurance Policy is a crucial safeguard for construction projects, providing protection against a wide range of risks that can arise during the building process.
