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What is Builder's Risk Insurance?

Existing buildings are exposed to a wide variety of threats—fire, flooding, and vandalism are just a few of the ways building structures can be harmed. However, buildings under construction aren't ready to face risks that completed buildings can withstand. There's also the chance of an accident during the construction phase, like materials being destroyed or installed incorrectly. A proper risk analysis from our Chris Black Insurance agents can help reduce the number of threats a new construction faces, and our agents can help reveal additional threats that may need to be covered by additional policies.

Builder's risk insurance is a policy designed to mitigate the chance of loss and protect you in the event that damage is done to the building. This policy is most commonly purchased by landowners and those funding the project, although some contractors purchase it in order to have more control over how each job is insured.

This policy is mainly designed for new construction, rather than changes and improvements to existing buildings. That form of construction is usually covered by property insurance and does not need any additional coverage, although it's best to talk with an agent before starting any particularly large project just to be absolutely sure it's covered.

What Does Builder's Risk Insurance Cover? What Does It Not Cover?

Builder's Risk Insurance generally covers the owner, the lending institution, the contractor(s) performing the work, and other related parties. In addition to providing coverage for damage to the building itself, most plans also cover temporary constructs (like scaffolding), materials, and equipment being used (whether it's currently on-site or off-site). The majority of policies are written on an all-perils basis, which means that reimbursements are available for any losses except those specifically excluded.

Common exclusions from this coverage include (but are not limited to):

  • The value of the land itself
  • Employee theft
  • Damages beyond the estimated value of the construction
  • Any losses brought by law or ordinance changes
  • Damage from earthquakes
  • Losses from war, nuclear hazards, or actions by civil authority

As you can see, most of the exclusions are not likely to occur during the course of a normal construction project. The value of the land is the only one likely to change as new work is done, and you will likely need to account for any improvements or losses the next time your company prepares taxes.

Builder's Risk Insurance Policy Lengths

Most policies last until the building is no longer under construction. The exact point at which this occurs can vary—it may be when certain parts of the structure are done (but finishing work, like painting, has not been completed), up to the day it opens for business, or when the contract with the construction company ends. If you're worried about interim risks—like the building being damaged between when construction finishes and when it opens for business—talk to one of our agents and ask about extending your coverage.

 

1. "Threat/Vulnerability Assessments and Risk Analysis." WBDG. Accessed April 20, 2016. https://www.wbdg.org/resources/riskanalysis.php.

2. "Who Should Buy Builder’s Risk Insurance?" BuildingAdvisor. Accessed April 20, 2016. http://buildingadvisor.com/who-should-buy-builders-risk-insurance/.

3. "How Do I Account for Land improvements?" Questions & Answers - AccountingTools. Accessed April 20, 2016. http://www.accountingtools.com/questions-and-answers/how-do-i-account-for-land-improvements.html.

Our Locations

Lutz

1916 Highland Oaks
Lutz, FL 33559
Main office: 813-782-1777
Toll free: 877-807-1333

Sarasota

3384 Magic Oak Lane
Sarasota, FL 34232
Main office: 941-922-2600

Our Providers

I am Mike Wooten. I just want to tell you how happy I am working with Chris Black Insurance and Sharon. I was here today and talked to them about my homeowners and they were able to save me over $1200 a year on my homeowners insurance. I would recommend Chris and his agency to anybody.
Mike Wooton
My name is Bonnie. I have been a customer of Chris Black Insurance for about three years. Recently with the skyrocketing price of insurance, I wanted to find a better price and Chris and his staff were on top of the situation and they hooked me up with a good insurance company, Travelers, and saved me roughly $700 in the transition. So kudos to them.
Bonnie Hess
I am Gordon Bogart and I live down here during the winter. I own an insurance agency in Ohio and I got involved with Chris several years ago. He does a great job and I send a lot of people to him that I know from down here. We've got a very large agency in Ohio and I wish Chris would come work for us up there.
Gordon Bogert
My name is Bob. I have been a Chris Black Insurance customer for a couple of years now. The reason I began business with Chris is because he was so responsive. I did some checking and his rates are extremely competitive and they have got great customer service. I highly recommend them to my friends and neighbors.
Bob Cline
Chris es la primera person aquí en Florida, después de 13 años, que pasó mucho tiempo conmigo explicando los detalles de la póliza. Estoy muy complacida y satisfecha con el servicio que recibí. Lo recomiendo con confianza. Chris is the first person to take the time to explain the details of the policy. I am very pleased and satisfied with the service. I confidently recommend Chris to others.
Rocio Bonilla