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
What Is Covered
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
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.
Limit of Coverage
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
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
Builders risk policies commonly exclude losses due to workmanship, pollution, earthquake and flood.
