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image of contractor on job siteBuilders risk insurance is a type of property insurance. As the name implies, it covers a property during the construction process. Imagine a home under construction. The same risks can happen to it as can happen to a completed properly, including  fires, theft, and vandalism.

As a builder, obtaining this insurance protection can provide a sense of peace of mind for the end buyer. It also protects your interests now, while the property's construction is underway. Here's why it can be so valuable.

#1: It's Far-Reaching

Unlike many specific forms of insurance, builders risk insurance is rather inclusive. It provides protection from the most common risks associated with the construction of the building. This usually includes fire, wind damage, vandalism, vehicle and aircraft-related damage, hail, theft, and lightning damage. More so, you can often extend this coverage to include the materials onsite that are not yet in place. These materials are usually high risks for builders.

#2: Coverage Limits Are Flexible

Another key to remember about builders risk insurance is that it is possible to customize coverage to the specific needs of that property. Generally, the coverage should be at least the value of the project.

Many times, it is best to use the construction budget as a guideline for how much coverage is necessary. Builders can choose the length of time necessary for this coverage. It can be as short as six months. It can extend to 12 months. In some situations, the initial policy term can extend even further. Often times, the insurance company can cancel these polices on a pro-rata basis once construction is complete.

#3: It Is Cost Effective

Most builders risk insurance policies are affordable to the builder. The builder can also sometimes legally move the cost to the home buyer, reducing any actual costs out of pocket. Often, this type of policy will cost between one and four percent of the construction project. This varies from project to project and region to region, though.

The key to remember here is that it often provides outstanding protection. However, it often does not cover water damage (flooding) or contract penalties. And, it probably does not cover things like earthquakes or employee theft. However, most of the risks contractors face during the construction process do have coverage. That can be critical to keeping the project on time.

To learn more about what your coverage will protect, please contact McFarlin Insurance Agency, LLP at 410-312-7800 for more information. One of our agents can help you better understand what your policy will and will not cover. Remember, you must always structure your policy to meet your unique needs.

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Columbia, MD 21046


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