News from Dave | Builders Risk a Unique Coverage

Your hard work has paid off; success allows you to fulfill a dream of your lifetime. Oh the excitement, building the home of your dreams.  So may things to do, find that perfect piece of land, interview and choose a contractor, obtain the construction loan...

One last thing before closing the loan and starting the project:

GET INSURANCE!

What kind of insurance do you need to purchase, Homeowners insurance? Homeowners insurance can be used in this situation but has many limitations, Builders Risk insurance is a better alternative.

What is Builders Risk insurance?  This form of insurance provides coverage for losses to the home under construction from an insured peril.  Damage caused by fire, lightning, wind , theft of building materials and equipment on the jobsite waiting to become part of the structure as well in transit and temporary storage at a different location  are all examples of the coverage provided by a Builders Risk insurance policy.

The homeowner can purchase this policy for the once in a lifetime construction project as well as contractors that regularly build homes or commercial structures. In the case of the homeowner, the policy is written for the completed value of the home and the premium tends to be comparable to that of a homeowners policy. For the contractor, the policy can be written for one project or written to cover several projects occurring simultaneously or consecutively.  For the contractor that has many projects the policy can be placed on a reporting form ensuring coverage applies to projects in the beginning, middle and final stages of construction. Coverage can even be provided to model homes and homes or buildings that completed and for sale.

Coverage begins when the building materials are delivered to the construction site and remains in force until one of the following occurs. If you are the homeowner, when the project is complete and accepts from the builder. This is the time to get a Homeowners insurance policy.

 If you are the contractor, once your interest in the property ceases. If the policy is on a reporting form, the reporting requirements have not been met. Ninety days after occupancy of a single –occupancy structure, unless the property is being used as a model home or model home leaseback. The building is leased or rented to others. For multiple family buildings when 50% of the space is leased or rented to others, for commercial buildings when more than 75% is leased to or rented to others. The project is abandoned with no intention to complete.  Permanent property insurance is in force or when the property is accepted by the owner or buyer.   

So if you a homeowner, embarking on your lifetime dream or a contractor, building homes or commercial structures for a living. A Builders Risk insurance policy is the correct type of policy to protect your property.

For further clarification of this type of coverage contact your insurance professional