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When and why would you ever need a Builder’s Risk Insurance policy? These are questions that we hear from contractors who have heard about this coverage and need to know more. You are asking the experts: Farmer Brown has been assisting with providing specialized insurance coverage for more than 20 years.

Planning for profit

Planning for profit means taking into account things that can go wrong over the course of construction. However, even with the best planning, not many builders have the financial strength to absorb losses. Neither is it wise to your well-earned profit when you can insure against financial losses.

Your construction project profit is in (imminent) danger

Any contractor knows that things can and do go wrong during the course of construction. The attitude that it will never happen to me is ridiculous in this industry. It is better to be prepared.

Have you prepared for the following potential financial loss:

1. The costs of replacing equipment, tools and materials in the event of theft.
2. The costs of replacing or repairing damage to the building you are constructing, repairing or remodeling
3. The costs of penalties, fines and lost rental when projects are delayed through business interruption.

What is a Builder’s Risk Insurance Policy?

A Builder’s Risk Insurance policy protects your investment, and hence your profit. It is specialized coverage designed to protect your insurable interest for your construction project. This includes your investment in items that could sustain physical loss or damage from a covered loss.

We’re talking about materials, fixtures and/or equipment awaiting installation or after installation during the construction or renovation of a building or structure.

How is this relevant to protecting your profit?

Your Builder’s Risk Insurance policy does not cover third party claims for property damage or bodily injury. This is covered by your General Liability Insurance. So what covered loss can be included in your policy?

Financial loss from the following incidents can be covered in your policy:

• Theft of building materials, equipment or tools either in transit or in storage
• Fire
• Wind, Hail, lightning, hurricanes, tornadoes
• Explosion
• Vandalism
• Vehicles or aircraft
• Changes in building law or ordinance

Ask the experts about a Builder’s Risk Insurance policy

You should be cautious when purchasing your Builder’s Risk Insurance policy. Not all policies are created the same, which is great because all construction projects are different. However, you will need to read through your policy carefully to be sure that your project risks are included. You may have to specify certain conditions.

In addition, if you are looking for the cheapest insurance rate, be sure that you are comparing policies with the same coverage from two or more insurance providers. We can assist with both of these problems, and get you the right coverage at the right price. Speak with our experienced agents at Farmer Brown Insurance (888) 973-0016

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