7 Tips for Securing Proper Builders' Risk Insurance

If you're a builder or contractor, you know that risk is a part of the job. That's why having the right builders' risk insurance, otherwise known as course of construction insurance, is vital. It serves as a crucial element of a successful risk management program. Builders' risk insurance can be complex and securing proper coverage can be tricky. Here are seven tips to ensure you obtain the proper insurance:

1. Understand project exposures

Before securing a builders’ risk policy, complete a detailed inventory of all possible exposures, including those on location, in transit, and off-site storage areas. From there, determine the level of protection needed and select a policy that limits the likelihood of coverage gaps.

2. Know when coverage begins and ends

ince builders' risk insurance is a temporary form of coverage, it's critical to know the exact dates associated with the policy period. Usually, a policy starts on the same date contracts are signed and concludes upon completion. However, a policy may include specific conditions regarding what triggers the beginning and end of the coverage.

3. Check the anticipated completion date

It's important to distinguish between the project's anticipated completion date and the coverage end within a policy. The former will help determine the amount of protection provided for losses resulting from project delays. An inaccurately anticipated completion date could lead to out-of-pocket costs.  

4. Mind the gap

Confirming what is and isn't covered under the policy is vital. Consider purchasing policy extensions and endorsements if any coverage gaps remain. Always make sure you get all-risk coverage instead of a named peril policy.

5. Understand the policy

Builders’ Risk has a 100% coinsurance clause. The project must be insured for a minimum of 100% of the replacement cost. With inflation on the rise, the accuracy of this number is crucial. We recommend that builders insure the sales price minus the cost of the lot.

6. details matter

The named insured must be listed correctly.

7. consult trusted insurance professionals

When you have heart issues, you visit a cardiologist. When you are a builder in need of insurance, you speak with Howard and David Cox from World Insurance, the homebuilders insurance specialists. Work with an expert to discuss specific coverage needs and secure a policy that can offer comprehensive protection for a given construction project and the parties involved.

Builders' risk insurance is a valuable form of coverage that can offer much-needed protection when properties or other structures are under construction. Any parties with a financial interest in the project should consider such policies and fully understand how they work, even amidst unexpected losses. For further guidance, contact us today!