What Is Building Insurance?
Builders risk insurance is also known as course of construction insurance and covers damage to a project while it is under construction. Traditional property policies exclude work under construction, thereby creating the need for separate builders risk insurance
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What Is Covered
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Builders risk insurance provides indemnity for the project under construction as well as materials intended to be incorporated into the project. Insurance coverage can also extend to losses stemming from a delay in completion due to a covered loss.
Perils Covered
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Builders risk policy forms are not standardized and can vary from insurer to insurer. They are commonly written on an all-risk basis which means all causes of loss are covered except for those which are specifically excluded.
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Limit of Coverage
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The insured needs to specify the amount of coverage desired when procuring the policy. A calculation of the replacement cost of the entire completed project is usually the most appropriate limit.
Cost of Coverage
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Policy premium is calculated on the basis of the complexity of the risk in addition to the total limit of coverage desired. Accepting a deductible in the event of a claim will also reduce the premium cost.
Exclusions
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Builders risk policies commonly exclude losses due to workmanship, pollution, earthquake and flood.
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