A Builder’s Risk Insurance Policy gives you protection from common mistakes and loss events when building.  Getting a policy is not a grudge purchase so you can get going with building. When done right it  is tailored to your project to give you maximum protection.

Some signs your policy could be failing you are:

  1. You took the cheapest policy available
  2. You aren’t aware of your exclusions
  3. Your project is worth more than the insured amount

Let’s talk about these in more detail.


1. You Took The Cheapest Policy Available

It makes sense to pay as little as possible for your insurance.  Costs add up in a building project and you want to protect your profits as much as possible.  It can be tempting to get the cheapest policy available and start building. The problem is the cheapest policy may not give you the coverage you need. When something goes wrong you may not be covered for it at all.  The old adage comes into play: you get what you pay for.


2. What should you do instead?

A better approach is to first focus on the coverage you need.  Where are you most exposed on your project? Consider the typical events that happen on a project.  Fire, vandalism, theft, burst pipes; these are just a few of the things you may want covered.  Once you have the right coverage only then find the lowest rate for that Builder’s Risk Insurance Policy.


3. You don’t know what is excluded

There may be things that are specifically excluded from your Builder’s Risk Insurance Policy.  A common exclusion is for earthquakes and floods. If your project is located at the coast your policy could also exclude wind damage.


4. What should you do?

If your project is in an area that is prone to these types of catastrophes, you should include additional coverage for these events.  It will cost you more but this will be far less than the financial loss if one of these events happens and you do not have coverage.


5. Your project is worth more than the insured amount

A Builder’s Risk Insurance Policy should be for 100% replacement cost of the completed building.  In other words how much would it cost to rebuild or replace if the building was destroyed once it is complete.  If you have valued the policy for less you will get a co-insurance penalty. This means a formula will be applied and you will only be paid out a percentage of any claim.


6. What should you do?

Make sure you have valued your project correctly.  It is advisable to estimate your costs on the high side in case there are price increases during construction. The value is replacement value and not market value.  It also does not include the cost of the land.

Trust the Experts With Your Builder’s Risk Insurance Policy

John Brown President Farmer Brown Insurance (888) 973 0016

John Brown – President

Our agents at Farmer Brown Insurance are specialists in this form of insurance.  We will get you the right coverage at the lowest rate.  We will also talk you through the policy options so you know exactly what you are getting.  Call Farmer Brown Insurance on (888) 973-0016 and make sure your Builder’s Risk Insurance policy sets you up for success.


Written by: John Brown
John has more than 25 years of experience in the insurance industry. He grew from a star insurance producer to owning one of the largest agencies in the country; he's a reference regarding contractor's insurance, commercial insurance, and builders' risk insurance.