Why You Should Get Homeowners Builders Risk Insurance
Owning a home is a huge responsibility and investment, that’s why you have to be responsible when it comes to protecting it.
And if you’re building your home from scratch, it gets even trickier with all the things that could possibly go wrong, and the same goes for when you’re doing home renovations.
Insurance is one of the best ways to form a financial safety net for your house in case of any kind of trouble.
At the same time, the world of home insurance can be daunting for someone without the necessary basic information and background.
One of the terms that you will frequently come across is builder’s risk insurance, and we’re here to tell you all about it.
What Is Homeowners Builder’s Risk Insurance?
Also known as course of construction insurance, builder’s risk insurance is a specific category of property insurance that offers financial protection for a home that is in the process of construction or renovation.
Specific liabilities tied to a home under construction or renovation are not included in the standard home insurance policy.
Homeowners Builder’s Risk vs. Homeowners Insurance
Speaking of standard homeowners insurance policies, how are they different from builder’s risk homeowners insurance?
Well, for starters, homeowners insurance is reserved for fully completed houses, which means it doesn’t have the necessary coverage to protect a house that is under construction or renovation.
Homeowners insurance, for example, includes liability coverage in case someone is injured in your home, unlike builder’s risk homeowners insurance, which entails the builder getting separate general liability insurance for both builders and homeowners.
What Does Homeowners Builder’s Risk Insurance Cover?
Builder’s risk insurance for homeowners mainly covers things like materials, on-site equipment, and supplies.
As for covered risks, they vary with each policy, but they can include theft, vandalism, explosions, fire, lightning, hail, and more.
Homeowners builder’s risk insurance can also cover debris removal, physical loss of property, the value of building material, and legal or engineering costs.
What Isn’t Covered by Homeowners Builder’s Risk Insurance?
It’s important to keep in mind that some scenarios are not covered under this policy, so it’s recommended to allocate an emergency budget so that you are able to handle any uncovered situations arising.
Homeowners builder’s risk insurance does not cover:
- Employee theft or vandalism
- Rust and corrosion
- Damage from faulty design
- Liability for home contents
- Injuries on the site
- Water damage or flooding
Who Pays for Homeowners Builder’s Risk Insurance?
In some cases, builder’s risk insurance is the responsibility of the contractor to protect their equipment and employees and it is factored into the overall cost of construction.
However, it’s more common for the construction company to only offer a recommendation of the suitable policy but the homeowner has to shop and buy it themselves.
Why Should You Get Homeowners Builder’s Risk Insurance?
So now to the key question, why should you get this type of insurance in the first place?
Getting builder’s risk insurance provides you with much more comprehensive coverage, as opposed to piling on additional coverage options to a standard homeowners insurance policy.
Builder’s risk insurance is one policy covering almost all possible perils within the course of the construction or renovation period.
You may think this would mean paying more, when in fact you’ll be saving even more money with builder’s risk insurance covering things like debris removal, for example.
One of the best things about builder’s risk insurance for homeowners is that the policy can be as flexible as the project needs it to be.
The duration of the policy can either be six, nine, or twelve months and can even be extended after reviewing and receiving approval.
This can give you peace of mind, knowing that your construction or renovation process is not tied to a certain time limit when it comes to being protected with insurance.
Higher Policy Limit
Another perk of having homeowners builder’s risk insurance is having higher coverage limits than those in standard homeowners insurance policies.
While this can mean a higher deductible, it would also mean limiting the money you pay out of pocket over the course of construction or renovation.
Less Home Insurance Claims
Filing a home insurance claim is no picnic for either the homeowner or the insurance provider.
Having homeowners builder’s risk insurance can minimize the amount of future home insurance claims.
How, you ask? Well, when you have a builder’s risk insurance policy during construction, you’ll be less likely to report a claim on the standard home insurance policy when there is any kind of loss.
Coverage for Things You Can’t Control
There are many possible risk factors in the construction or renovation phase that are completely out of your control, such as weather conditions, vandalism, or theft.
Builder’s risk insurance covers these things that are out of your control and would otherwise cost you a lot of money to replace equipment or materials after loss or damage.
Now that you’re equipped with all the necessary knowledge about homeowners builder’s risk insurance, you can make an informed decision on whether it’s necessary for your situation and which coverages you’ll need to include in it.
The most important thing is to shop around before you decide on a policy to get the best policy options for the best price.
You can contact one of our expert insurance brokers and get a free homeowners builder’s risk insurance quote!