Yes, You Need Builder’s Risk Insurance
Most construction contracts specify the contractor as the risk bearer if damage or destruction happens to an uncompleted construction project. Needless to say, contractors have more at stake and must utilize builder’s risk insurance. Builder’s risk insurance covers a building under current construction and the contractor, owner, lending institutions, etc. In order to determine the limit of your insurance, look at the construction budget.
It’s Bigger Than You
Builder’s risk insurance policies insure a few individuals and can indirectly provide coverage for third party claims. For example, if the drywall subcontractor, floods the building, the owner may have a claim against the contractor or subcontractor but instead of pursuing that claim, the owner opts to use their coverage under the builder’s risk. Builders risk coverage needs to be a part of every project’s risk management plan. Find out from the owner all subcontractors on the project to modify your builder’s risk insurance. Otherwise, the builder’s risk policy doesn’t address all necessary participants.
What Does Builder’s Risk Insurance Cover?
Damage from the following events will be covered by most builder’s risk insurance policies: (1) Fire, (2) Wind, (3) Theft, (4) Lightning, (5) Hail, (6) Explosion, (7) Vandalism, and (8) Vehicles/Aircraft. Read your policy, be familiar with its limitations, and contact a Tallahassee construction lawyer to discuss exceptions to your coverage. The cost of builder’s risk insurance usually ranges from one to four percent of the construction costs and coverage ends when the building project is completed.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.