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Builder’s risk insurance protects a building from property damage when it’s under construction, as well as covers construction materials and equipment. Usually the building owner or general contractor in charge of the project will take out a policy for the project, and it’s likely required for financed building projects.
Builder’s risk insurance is a type of property insurance that protects against damage or loss to a building under construction. It can cover the building itself, equipment and construction materials needed to build. The policy typically ends when the building is complete.
Construction comes with risks involving heavy equipment, defective materials, inadequate craftsmanship and unexpected weather, and this insurance makes sure those invested in the property don’t suffer huge financial losses.
Every insurance company offers different coverage with a builder’s risk policy, but common options include:
Your builder’s risk policy may not cover several areas of potential construction damage. Make sure to check your policy for these exclusions:
Any person or business invested in a building project should consider construction insurance since construction involves a variety of damage risks. While subcontractors may buy specialized policies to cover their risks in the project, the builder or building owner may buy the policy for the main construction.
If the builder already offers insurance for the project, the owner may not need a separate policy unless certain risks aren’t protected.
If the building project is funded by a lender or investor, the lender will probably require insurance. However, your city or state may not require coverage for the property if you’re financing your own project.
Even if it’s not required, a building construction policy may still be a wise investment. A building site has many hazards that could result in heavy financial consequences if you’re not protected.
Your exact cost will vary based on your specific project and the risks involved. Insurance companies consider several factors when determining an appropriate premium:
Your project may need insurance for more than the building under construction. Make sure you’re abiding by local and federal insurance employee laws and building codes.
Insurance to consider includes:
Chances are your building project needs insurance to cover its high risks for weather damage or theft of equipment and construction materials. Because coverage and benefits offered vary widely among insurance companies, you can compare several business insurance policies until you find the best option to suit your project.
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