Many of our clients, both commercial and personal, partake in new construction projects without consideration of the potential risks or making sure they have the proper insurance in place. Whether you are building a new 100,000 square foot office building, rehabbing a small two-family apartment downtown, or putting an addition onto your own home, there are insurance issues to consider. Builders Risk insurance is one consideration that you need to make.
Builders Risk insurance is a property-based policy that will better insure the risks associated with loss to your existing property, new buildings or additions, and the materials on-site and in transit to your job site. While many commercial property and homeowners policies provide some extensions of coverage for newly acquired or constructed properties, Builders Risk insurance is the proper way to address the loss to the property and the materials during construction.
Damage or loss to your building structure and the materials can be caused by many different perils. Some of the more common perils are fire, wind, collapse, theft, vandalism, and motor vehicles. Some Builders Risk policies can also be extended to cover flood and earthquake, as well as some new perils coming from the Internet exposure to your high-tech systems in the building.
We often find clients relying too heavily on the contractor or builder to provide the proper coverage. While this can work in some instances, we do recommend you review the scope of your project, the contract terms and insurance coverage requirements with your professional agent. A policy that you have purchased designed around your needs is always a better course to make sure your risks are properly insured.
While damage or theft to the building or materials is of concern to most people, less obvious is the exposure for loss of income and increased costs for re-permitting, financing costs, architectural and engineering fees along with other "soft costs". These costs can be just as important to insure and should be reviewed with your professional independent agent.
Builders Risk insurance is one key element that should be addressed prior to the start of any project regardless of its size or scope. There are other insurance considerations that we will address in another blog forthcoming: Things like making sure the proper liability insurance coverage and limits are in place and having the proper contractual language in place to protect you from damages and injuries that could result from the job site. It is crucial to make sure you have these details ironed out before you begin your project. Please contact your agent at Ten Eyck Group so that we can guide you through the process.
-Christopher A Brassard, CIC. President, Ten Eyck Group