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The Basics of Builders Risk Insurance

Builders risk insurance covers materials, fixtures, and equipment slated for use in the construction or renovation of a building. If any of the items become damaged or unusable, the insurance covers the expense of the loss. The specifics of this type of policy depends on the insurance company that offers the policy. But here’s an overview to teach you a bit more about builders risk insurance.

Do You Need Builders Risk Insurance?
This type of insurance is available for commercial and residential property. And individuals and organizations can get a policy in their name. Some common builders risk insurance policy holders include:
1. House flippers who buy inexpensive property, make renovations, and then sell the property for a profit.
2. Contractors who provide building materials to workers during construction projects.
3. Builders who work on the maintenance, repair, or construction of commercial and residential buildings.
4. Homeowners or property owners in the process of making renovations.
5. Retail companies that store and sell materials, fixtures, and equipment slated for use in construction or renovation projects.

Do you or your organization fit into one of the above-mentioned groups? If so, then you might consider builders risk insurance.

Determining if You Need Coverage
Depending on your project, you may or may not benefit from a builders risk policy. Policies are usually suggested for new constructions, remodeling projects, and installations.

The insurance company issuing the policy must also consider the project as either a commercial or residential risk. But not all insurance companies agree on what makes a commercial or residential risk.

For example, an insurance company might consider a project as residential if it involves a 1 to 4 family home. But living quarters larger than a 1 to 4 family home would fall into the commercial category.

But most insurance companies are more lenient about what qualifies as a commercial project. Everything from a sports arena, to a large apartment building, to wind turbines would likely qualify as a commercial project.

What Does a Policy Cover?
Builders risk covers building materials against loss and damage – most often on a construction site.

A comprehensive policy will likely offer protection against vandalism and theft. It might also include coverage for incidents such as flood damage, wind damage, and earthquake damage.

A policy may or may not cover damages to scaffolding, fencing, landscaping, and subdivision signs. Whether or not these items are covered depends on the insurance company.

Is Liability Included?
Builders risk policies do not offer liability coverage for injuries or accidents that occur in the workplace. You’ll have to purchase a separate liability policy in addition to the builders risk policy.

Contacting an Insurance Provider
Builders risk insurance is a relatively simple way for people such as subcontractors, homeowners, and those dealing with construction to protect their interest in a building project.

The best way to determine if this coverage is right for you is to speak with an insurance agent, consultant, or risk management team. You need to calculate your risks, and determine if builders risk insurance is worth the investment.

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