Builders Risk Insurance Guide: Introduction
This page provides you with all the necessary information you need to know in order to make an informed choice about builders risk insurance (also called course of construction insurance). Furthermore, we can connect you with an experienced insurance broker who will advise you and find the best rate across numerous insurers.
What insurance protection do you need as a builder?
As a general contractor or project / future building owner you want to ensure that your project is successful and protected during the whole course of construction, from putting up a fence to the last turn-key moment. Once your project has started, there is a constant increase in value based on materials and labour.
Here is an overview of key things covered by this insurance.
|Construction Project elements||Brief description||Coverage value|
Structure of the building
|A work-in-progress building structure can be easily damaged by fire, wind, hail, vandialism or other natural disasters.||Coverage value is typically defined by the value of consumed construction materials and labour spent on the project.Does not include the value of the land where the building structure is located.|
Construction materials (before transportation or on-site)
|Construction materials also have some risks associated with them, both when they are waiting to be transported and when they are stored on the construction site. Typical dangers are theft (but typically not theft by your employees), vandalism or various natural disasters such as wind, fire, hail etc.||Coverage value is typically defined by the value of the construction materials plus transportation costs.|
Construction materials during transportation
|While construction materials or other property are being transported, there are other risks that can impact them, such as theft of the transportation vehicle with your materials inside, or damage to the materials.||Coverage value is typically defined by the value.|
Special project circumstances
|There are many other risks that need to be considered with respect to the building structure and materials e.g. risk through earthquake, flooding, sewer backup etc. Special coverages can be added to an existing policy to extend it.||Depends on a risk / situation.|
What else to consider for a proper builders risk coverage:
- Consulting costs: Sometimes consulting costs are additional expenses that might come on top of your “hard” costs. These can be required in order to provide some reports or audits.
- Inflation and wage increases: Inflation or growing workers’ wages can mean that the coverage you actually need is higher than actual prices you have paid to date.
- Debris removal / demolition: Repair of a damaged building might require not only new materials and labour, but also a cleanup of the site. These costs need to be considered as well.
- Temporarily, auxiliary structures: Numerous auxiliary structures also need to be considered, such as formworks or hoardings.
- Soft costs: Legal, insurance or audit fees are examples of soft costs associated with construction and need to be taken into account as well.
- Zoning changes: In some cases some zoning changes can change during the project, meaning a different level of spending if you have to re-do the project.