What is Builder’s Risk Insurance, and Why Might You Need It?

Homeowners insurance coverage protects a structure that has already been built. Builder’s risk insurance is designed to protect new construction, renovations or additions, and covers a variety of situations such as:

  • Fire
  • Wind
  • Theft
  • Vandalism
  • Negligence

Unoccupied property has different risks than occupied structures. For instance, the foundation of a finished home is protected from the elements by the structure above it. A newly poured foundation, however, could be damaged by a weather event like a large storm. And a well-lit, occupied home may not be as appealing to a thief as a darkened construction site, no matter how well it has been secured. Builder’s risk is important coverage because it protects your property before it is occupied.

  • Some of the items that builder’s risk insurance may pay for include:
  • Damaged or stolen building materials and/or fixtures
  • Damaged or stolen construction equipment used during the course of the project
  • Defective workmanship
  • Debris removal
  • Pollutant cleanup and removal
  • Liability if you or others are hurt or injured at your construction site

Do you still need builder’s risk if your contractor already carries insurance?
That depends. Reputable contractors carry liability and workmen’s compensation for their employees. And that coverage may be fine for the average homeowner with an average-budget project. But if you are a candidate for private-client insurance or are building a high-value home or doing a renovation project with a large budget, it is likely worth checking into builder’s risk.

Although builder’s risk insurance can be purchased by builders or their clients, the best course of action for a homeowner may be to carry it in your own name and list the contractor as a named insured. Both parties are then protected from outside events that damage a job in progress. In addition, though, as the policyholder, you’ll be protected from errors caused by the contractor.

How much builder’s risk insurance do you need?
Because builder’s risk policies can be fairly complicated and vary state-to-state, it’s important to have a well-written, clearly defined policy to eliminate confusion and speed up the payment process if you do have a claim. The insurance experts at Kelly Klee have the knowledge and experience to help you determine your builder’s risk needs and ensure that your policy protects you fully.

The best time to look into builder’s risk insurance is before your project begins. If you are planning a new build, add-on or renovation, Kelly Klee would be pleased to help you evaluate whether you are a good candidate for this type of coverage and get you competitive quotes.