You probably know you must have general liability insurance coverage. But, you may not be as aware of the benefits of also signing up for builders risk insurance. This coverage can prevent home renovation contractors from paying out-of-pocket for unexpected incidents, like the theft of costly copper plumbing pipes.
What is Builders Risk Insurance?
Builders risk insurance protects the value of materials, fixtures and equipment used in construction or renovation from the costs related to physical loss or damage by unexpected events. It covers building materials and equipment belonging to general contractors or subcontractors who are not included in homeowner’s insurance policies.
Builders risk insurance provides coverage for damage from a variety of unexpected events, including:
- Wind (depending on geographic location)
This type of policy extends to equipment or materials that have yet to be installed or transported to a work area or property. But, a builders risk policy will not cover tools or equipment, workplace accidents, liability or property that do not belong to the insured party.
How it can help Home Renovation Contractors
A builders risk policy will typically pay for damages up to a limit that accurately reflects the total completed value of the structure, including its materials and labor costs.
Although home renovation contractors benefit from this coverage, building owners and lending institutions often enroll as well.
Unless otherwise agreed upon, home renovation contractors assume the risk of accidental damage or destruction of a project before it is completed and accepted by the client. A builders risk insurance policy reduces home renovation contractors exposure to loss while work is underway.
Even though this type of insurance is not mandated by law, it is a useful tool that will ensure none of your projects are derailed by costly events beyond your control.