How to Prepare a Builders Risk Insurance Checklist

Prepare a Builders Risk Insurance Checklist
Prepare a Builders Risk Insurance Checklist

How to Prepare a Builders Risk Insurance Checklist. Builders risk insurance insures a building under construction. The contractor normally purchases a builders risk policy to cover their materials and the property under construction until it is claimed by the owner. Builders Risk policies cover new construction or remodeling projects. Builders risk policies are project specific and are purchased in addition to a contractor's general liability insurance. A contractor should ensure his risk policy contains the following basic provisions.

Ascertain if the business risk policy covers building materials and supplies on the job site, in storage and in transit. Materials should be insured installed and uninstalled.

Check to see if temporary structures, foundations and excavation sites are adequately insured by the business risk policy.

Ensure equipment, scaffolding, fences leased and owned by the contractor are covered on site and in transit. Remember if disaster strikes, you may be responsible for lease payments on destroyed equipment. Your builders risk policy should provide coverage for this eventuality.

Verify the policy covers theft, flood, sinkholes, fire, earthquakes, and other weather related damage. Water and sewage damage should be addresses in the policy which should also contain a broad all-risk provision to insure against non listed perils.

Confirm costs relating to design error, faulty workmanship, changes in laws and other costs relating to business interruption are covered by the business risk policy. A contractor may want coverage for other "soft" costs that occur if the project is significantly delayed.

Study your policy to make sure all insured are named, including sub contractors, equipment owners, building owners and mortgage companies if applicable.

Review any policies held by the property owner and ensure they are compatible with the risk policy.

Tips & Warnings

  • The events terminating coverage should be clearly set forth in the policy. Acceptance by owner is the industry standard. The definition of when coverage ceases should match other contractual obligations of the parties,
  • Debris removal should be covered as should testing and pollution costs.
  • Make sure your materials are insured for replacement value and cost of rental equipment is covered.
  • Standard Builder Risk Policies exist in the marketplace. Review the standard policies to ensure they cover the particulars of your current project.
  • Utilize an insurance agent who specializes in commercial insurance.

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