builders risk insurance
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Builders Risk Insurance

Though the Great Recession ended in 2009, many businesses are still acting as though the recession never ended. Great financial tragedy often results in people being more cautious with how, where, and when they spend their money, but that is not necessarily a bad thing. Yes, it results in economic hardship over the short term if people are left with less disposable income, but restricted access to capital forces both individuals and businesses to address their problems with a greater degree of creativity, which can spur long term growth. The insurance industry is currently in the process of re-inventing the way it conducts its business through the creation of individualized and flexible payment plans for contractors. These business risk insurance plans have emerged due to the demand created by builders who have moved from big projects to much smaller projects such as home renovations and remodeling.

Flexible Payment Plans

With contractors shifting to smaller projects, the insurance industry adjusted its policy forms and coverage options because nobody was building. No building meant no one was buying insurance, and with nobody buying builders risk insurance, the industry needed to shift its plan of attack. These new programs involved paying lower premiums and paying in installments rather than contractors having to front most of the money before they started the project. “Pay-as-you-go” insurance plans give builders the luxury of deferring a payment until the time of sale thereby allowing them to use the profit they make off of their project to pay for completed operations coverage.

Companies like Cove Programs in Los Angeles are sponsoring change by offering flexible policies for smaller builders. Just this past year, they introduced a variety of new policies that offer general liability and builders risk insurance on an annual, multi-year, or project basis. These policies cover everything from single-family detached homes to apartment projects; it just depends on the needs of the builder. Cove designed the programs around the business plans of the contractors they were working with instead of forcing the policy around the standard one to two year period. Through such flexibility, insurance companies are helping get contractors back on their feet and are hoping to see further growth in the months and years to come.