It's vital that the construction of a building has the proper insurance policies in case an accident or problem occurs. Having a builders risk policy will ensure proper coverage of a building and the materials used to construct it. It's important to remember that this policy only covers the building and its components where they are being built.
Coverage Basics: Structures That are Covered
Builder's risk insurance can cover a variety of different structures. This includes new structures and additions to new structures that are being built. Equipment or items that are thought of as a part of the building have coverage as well. This can be anything from a boiler to an electrical system.
Coverage Basics: Time
When getting builder's risk insurance, the type of policy must cater to the specific construction needs. For instance, if the building is going to take eight months to construct, the policy needs to cover that amount of time. The usual spaces of time covered include a three, six, and twelve-month policy. If more time is needed, the policy can generally be extended. It may only be able to be lengthened once, though, so it's crucial to have an accurate estimate of how much time the construction will take.
Coverage Basics: Monetary Limits
The amount of money paid for damages depends upon the limit of the policy. When calculating the limit, the labor costs and the entire cost of building materials is counted. The value of the land the building is on is not counted. Careful consideration should be taken to calculate how much coverage is needed.
What Builder's Risk Insurance Doesn't Cover
What a policy will not cover depends in some part on the provider, but there are several things that most policies don't cover. Employee theft is not covered along with war or government action. Any possible contract penalties aren't covered under the policy, either.
An important area of construction that isn't covered is shoddy construction or faulty materials. Bad planning or design are not covered, too. It's important to make sure that the construction of a building is done with high-quality materials and solid planning.
Other problems like earthquakes or certain weather damage aren't generally covered. Check with the insurance provider to see if water damage or special earthquake coverage is available.
It's important to look over insurance forms carefully to know exactly what is and is not covered. Many people may believe certain items are covered automatically, but it's a bad idea to ever assume this. Items like tools aren't covered under these policies. If someone has an accident on the construction site, they will need separate insurance coverage for that because builder's risk insurance does not cover accidents.
The general rule is that the insurance policy ends when the building is completed.
Other Things the Policy Does Cover
Builder's risk insurance has many things it will cover. General theft is usually covered along with fire and wind damage. Other weather problems such as hail and lightening are covered under most policies as well. Damage from vehicles and even aircraft may be covered depending on the policy.
There are certain extensions to coverage policies that include a variety of things. There is coverage to protect any construction materials and property that is being transported to the construction site.
Temporary construction apparatuses like scaffolding can also be under coverage. These structures are only covered if they are on the job site itself.
Sometimes it is necessary to use temporary places to store materials. As long as these materials are going to be used on the construction site and belong to the insured party, there are coverage extensions that can protect them.
Unfortunate events such as sewer backups may also be covered by the policy.
When looking to build a new structure, getting a builders risk policy is a must to protect from damage and loss of many types.
Leading insurance expert Carolyne Roehm has written extensively about the insurance industry. She is currently a guest blogger for numerous insurance websites. Her most recent postings can be found at http://www.CanonInsurance.com.
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