Building a new home or renovating requires a good builder’s services. When you have a list of potential candidates, start asking questions. Know whether a builder holds insurance before you sign on the dotted line. Insurance coverage protects against various liabilities stemming from construction site accidents. The question now is: what type of insurance should your builder have? Your builder should have some basic coverages, including builder’s risk insurance. Builder’s risk policies are available for new construction projects, remodeling, and installation work.
Many Things Can Go Wrong, So the Builder Should Be Prepared
As far as construction projects are concerned, many things can go wrong. Unforeseen circumstances arise, such as fires, burglaries, or natural disasters, to name a few. Sometimes, things don’t go as planned. This is why builders’ risk insurance is so important. It covers the construction project against damage caused by any covered perils.
Simply put, it protects the investment. If your project is highly complex, make sure your builder secures the right insurance services as a home addition. Not everything is covered under builder’s risk insurance, so the policy’s exclusions should be checked.
Who Can Buy Builder’s Risk Insurance?
If the builder has a good plan, the construction costs, debris removal, and other expenses associated with restoring the construction are covered by the insurance policy. It covers the building and the structure under construction. Additionally, the policy covers materials, supplies, and equipment on-site. Because every construction project is unique, each builder’s risk policy is different. The costs vary depending on what the builder needs. If the construction project comes at a high price, the insurance rate will be similar.
Interestingly, builders aren’t the only ones who can buy a risk insurance policy. Several groups of eligible clients include homeowners/property owners, contractors, house flippers, development/investment companies, retail companies, and school districts. In other words, builder’s risk insurance is suitable for anyone with a financial interest in the property that’s being erected or renovated. Homeowners’ and builders’ risk insurance bear similarities, yet they don’t provide the same coverage. It’s a good idea to reach out to an expert. They’ll evaluate the project and offer a tailored policy based on all contributing factors.
Hiring An Uninsured Builder Comes with Risks
One risk you should never take is hiring an uninsured builder. When the unthinkable happens, you need a cushion to protect you from financial liability. Make sure to hire a builder with builder’s risk insurance. Your standard homeowner’s insurance isn’t going to cover the damage. Please do yourself a favor and hire someone who has all their insurance bases covered. Beyond asking at the point of contact, there’s no way of knowing if someone carries insurance until something unfortunate happens. Draw up a contract that stipulates that the builder holds insurance. This will put your mind at rest.
All in all, don’t let your builder place a peg on the ground before you have some guarantee they have insurance coverage.