Builder’s risk insurance- Can it be a savior during the time of your emergency? Let’s find out.


There is a saying-“A man who does not plan long ahead will find trouble at his door”. Nothing is predictable in human life. You can never know what is waiting for you after this very moment. The future is unforeseeable and to survive in the midst of this, you must need planning. Well- organized planning can save you from a lot of troubles. Builder’s risk insurance is one such example of well-thought-out planning.

The focus of a builder’s risk insurance:

A builder’s risk insurance is a special type of coverage that focuses to safeguard a person’s or organization’s property, material, or building which is under construction. It can cover both a whole new structure and an already existing structure that needs renovation. This coverage does not have any standard form; it generally depends upon the nature of the project or the beneficiary.

The circumstances which call the attention of the insurance:

A builders risk insurance generally covers damage instigated by fire, storm, vandalism, explosion, etc. But in most cases, it does not cover any natural calamities such as earthquakes, hurricanes unless it has any specific endorsements. However, the places which are geographically unstable or prone to other natural disasters get consideration. If harms occur due to terrorism, internal theft, ill-planning, and any government actions, the insurance usually does not take liability.

Cost of the coverage:

Generally, it ranges between 1-4% of the total construction cost, but for the most part, it depends upon the nature of the policy. The overall construction budget is one of the most important factors for determining the pattern of the policy.

For whom is this insurance?

Normally a general contractor or a custom builder buys this insurance, but a property owner can also buy it. According to many architects, a property owner should buy the policy himself, otherwise, there remains a possibility that the contractor could abscond with all the funds which he gets directly for the policy.

Is the extension of the policy possible?

The coverage expires when the project is handed over to the property owner. But when damage is occurred to the property for transportation to the job site or for overflowing water due to faulty drainage system, the policy gives compensation. If temporary constructions or any scaffolding is made, the policy bears the cost.

Don’t forget these points:

One should keep in mind these following points:

  • Subcontractors should have their own policy insurance.
  • The property of others will not be covered in the insurance.
  • For any kind of tools and equipment, there is no coverage.
  • Any accidents in the job sites will not be covered.
  • Generally, the policy ends when the project is completed and handed over to the owner.

As the insurance doesn’t have any generalized pattern, it may seem quite intriguing to choose a policy, but it definitely is a savior during the time of emergency.


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