builders risk insurance is a unique form of commercial property insurance that insures against damage to property while they are still under construction. This type of insurance is especially beneficial to building contractors and remodelers, who may be underinsured in the event of damage or loss of property during the construction process. While many commercial insurance policies can protect against potential losses from natural disasters such as fires, water damage and vandalism, many policies only provide protection against damages due to vandalism or acts of violence. While this may be true, it is not nearly enough protection to adequately replace a building once it is completely constructed.
The construction costs involved in building a new building far exceed the initial costs associated with building a pre-existing building, which makes a new construction building one of the most expensive types of businesses to purchase. This cost factor alone drives up the cost of building construction, which means that many builders need additional coverage to protect themselves in the event of damage, theft or damage due to natural disasters. Builders insurance can help cover these costs by covering all expenses that can be attributed to construction. In many cases, this includes the cost of materials, labor, equipment, and other miscellaneous expenses associated with building.
While this type of insurance is typically not required in most areas of the country, it should always be included when obtaining builder’s risk insurance policies. Insurance companies offer different levels of coverage, but each level has a specific dollar amount that it will pay out in the event of a claim. For example, building insurance will generally pay out a fixed percentage of the total building cost, while general liability insurance will pay out a fixed amount for damage or loss caused by any injury or damage that occurs on the premises of a building. While the amount of coverage differs among different types of insurance, it is important to ensure that you receive the right type of coverage at the right amount for your business.