Understanding Builder's Risk Insurance: Essential Coverage for Construction Projects

Hey everyone! This is Jon Kuhlmann at Citizens Alliance Agency.

Commercial insurance sometimes needs a builders risk policy.

A builder's risk insurance policy, also known as course of construction insurance, is specifically designed to provide coverage for construction projects. It protects the building or structure being constructed, along with materials, equipment, and supplies on-site that are intended to become part of the completed project. Here are the main aspects it typically covers:

·        Property Damage: Covers physical damage or loss to the structure under construction caused by events like fire, lightning, theft, vandalism, or natural disasters like windstorms.

·        Materials and Equipment: Protects materials and equipment stored on-site, in transit, or waiting to be installed.

·        Coverage Extensions: May include provisions for debris removal, pollutant cleanup, and soft costs like loss of rental income or additional interest on construction loans due to delays from covered losses.

However, this policy doesn't cover certain risks, such as earthquakes, flooding (unless added), normal wear and tear, employee theft, or poor workmanship. It also doesn't cover liability claims or accidents involving workers—that's what general liability or workers' compensation insurance is for.

This type of insurance is usually purchased by builders, contractors, developers, or property owners to ensure their investment is protected during the construction process.