Buildings in the course of construction present a unique exposure. Your lender will generally not approve your loan for construction until you have secured insurance coverage that will repay the loan if the building is destroyed while it is being built.
If you already have property insurance, your insurers may have some coverage if the new construction is attached to an existing structure. If this is not the case you will need to buy a Builders Risk Insurance policy.
The standard AIA construction contract places the obligation of obtaining property insurance on the owner. Some builders may include builders risk coverage in their proposal. You should consult with an insurance professional before agreeing on terms with your contractor.
Builders Risk coverage applies to buildings undergoing construction, remodeling, or repair. It basically covers the owner’s and contractor’s interest in the materials/supplies at a jobsite before they are installed, and the value of the structure being constructed, remodeled, or repaired until the construction is completed and accepted by the owner. The coverage may also apply to the materials/supplies that are intended for the job while being transported to a jobsite. Scaffolds, forms, and temporary structures may also be included.
Most Builders Risk policies are written on an All Risk perile form. The builders risk coverage applies to sudden and accidental events and not poor workmanship.
To control losses, a program should be established to address management practices, fire prevention, site exposures, and security.
Contact an Inland Marine specialist at our agency today to find out how your business can insure its most valuable assets while working or traveling off-site.