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COVID-19’s impact on the construction industry continues to intensify amid widespread shutdowns. In this article, let’s look at Builder’s Risk insurance and COVID-19.  We will discuss business-interruption coverage and if it will apply to the pandemic. At least 316 million people in the US are currently under the directive to stay home. As a result, the consequences for failing to comply include civil or criminal penalties, and even jail time.


What Do The Restrictions Mean?

Most of the issued “stay at home” and “shelter in place” orders are similar. Thus, they require residents to stay indoors except to conduct “essential activities” or to go to work in “essential businesses.” In California, Governor Gavin Newsom deems construction essential. However, six counties in the California Bay Area ordered the shutdown of all construction projects except certain types of construction. Furthermore, construction of housing projects is permitted. But many commercial projects have had to shut down.

In New York, Governor Andrew Cuomo’s order to close all non-essential businesses exempted construction work. However, as of March 27, the state banned all non-essential construction except for emergency purposes. Furthermore, construction projects deemed necessary include:

  1. Roads
  2. Bridges
  3. Utilities
  4. Hospitals
  5. Affordable housing.



Business Interruption Coverage

If your state, county, or city directs you to shut down your construction projects, you are bound to incur significant business interruption-related losses and extra expenses. This raises questions on Builder’s Risk insurance and COVID-19, with respect to business interruption coverage.



Builder’s Risk Insurance and COVID-19-Related Business Losses

Builder’s Risk insurance is a type of property insurance designed to cover buildings and structures under construction. Moreover, most standard policies cover these items:


  1. Building materials and equipment
  2. Foundations
  3. Fixtures
  4. Temporary structures such as scaffolding
  5. Construction signs
  6. Electrical work and wiring


However, it is possible to obtain additional coverage for more types of property, such as landscaping and construction material in transit. The common covered causes of loss include:

  • Fire
  • Theft
  • Explosion
  • Lightning
  • Hail
  • Vandalism
  • Aircraft or vehicle collision.


You can also extend your coverage to incorporate excluded or limited causes of loss. Such as business interruption, extra expense, and soft costs.


The coverage trigger for any property insurance policy is “physical damage to insured property by an insured cause of loss.” Furthermore, for your COVID-19-related claim to be accepted, your insurance provider must acknowledge the presence or threat of the virus on the insured property. And that it constitutes direct physical loss or damage. Your policy’s standard exclusions may exclude coverage for most claims. One such example is a policy that contains an exclusion for, “loss due to virus or bacteria.”


Confused? Call Us Today

John Brown President Farmer Brown Insurance (888) 973 0016

John Brown – President

Your Builder’s Risk insurance policy is unlikely to provide coverage for COVID-19-related business losses. But to know for sure, call us to review your policy for you.  We are experts in construction insurance. Furthermore, we can look into your coverage and exclusions and advise you. For more on Builder’s Risk insurance and COVID-19, call Farmer Brown Insurance at 1-866-587-1671.

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