What is the Explanation of Builders Risk Insurance?
Builders risk insurance is a form of property insurance that offers protection of a building while it's under construction. This type of insurance protects either the individual or the organization's interest in case there is damage during construction from a covered cause.
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Function
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Builders risk insurance protects property owners and builders during the course of construction. This type of insurance covers accidental losses, fire, wind damage, theft, vandalism and damage or destruction of property. It covers buildings during construction, as well as supplies and materials.
Optional Coverage
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Optional coverage can be added to standard builder's risk policies. Coverage that is optional includes flood and quake coverage, as well as delayed opening or loss of income.
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Considerations
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Builders risk insurance usually must be purchased by the property owner. Lenders typically will not provide construction financing until builders risk insurance is in place. To underwrite this type of insurance, an insurance broker needs to know the size and scope of the project, as well as the location and the cost of labor and materials.
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