If you’re contracting a new building, chances are, you are going to need to get familiar with builder’s risk insurance. This form of property insurance is unique in that it covers a building while the building itself is still being constructed.
The insurance plan is in place to cover all damages up to a certain limit. This limit will often be based on the construction budget itself.
What are the basics you need to get familiar with if you get this kind of insurance for your project? Read on and we’ll walk you through what you need to know.
The Cost of Builder’s Risk Insurance
If you’re considering getting builder’s insurance, the first question on your mind is likely how much money you’ll need to put aside to get coverage. The cost of builder’s insurance might vary from project to project, but for the most part, you should plan to spend somewhere between one and four percent of your overall construction costs.
Of course, the cost of a coverage plan will also depend on the extent of coverage offered and the exclusions that the policy might have.
Plans will typically cover ground-up construction, remodeling, and installations. These plans will differ in costs, especially seeing as these types of construction jobs will range in terms of their expenses and risks as well.
The best insurance option for your building will be the one that matches your construction problem and covers you from all the areas of risk your specific project might face.
If you end up needing to extend your coverage past your initial expectation for the project, you are also likely to see a rise in your costs. With most builder’s insurance plans, you will only be able to extend your coverage once.
Why Do You Need It?
A lot can happen when taking on a construction project. It can be difficult to get to the other side of the process without some type of incident occurring which can be costly or even prohibitive to fix.
This kind of insurance can help in-progress buildings face damage from natural disasters such as storms, wind, fire, earthquakes, and so forth. It can also help to cover damages incurred by vandalism, theft, and other exterior threats that might impact the build.
Without this kind of insurance in place, you can leave your whole project open to a great amount of risk. One disaster might be all it takes to bankrupt your plans and shut the whole project down right away. This situation is all too common around the country.
Keeping an insurance policy in place is the smart way to ensure you’ll be able to weather any storm that comes in the direction of your construction project, whether it is literal or not.
The Benefits of Builder’s Risk Insurance
If you’re embarking on a new construction project, it’s important to understand the benefits of builder’s risk insurance and how much you might need to budget to have it for your new build. With insurance in place, you can approach your project with much more peace of mind.
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