Whether it’s new construction or a renovation, a residential property or commercial, if you’re building, you need to consider purchasing a Builder’s Risk policy.

Some commercial property policies include coverage for this type of exposure, but there are often limitations such as the following:

• A sublimit for newly constructed buildings.
• Limitations on coverage for building materials.
• Limitations or exclusions for time element coverages.
• Lack of willingness from the property underwriter to provide coverage for the exposure.

The solution is to purchase a Builder’s Risk policy. Designed to cover property in the course of construction, it is appropriate for new construction, a remodel, and renovations. While there is no single standard Builder’s Risk form, many forms provide coverage on an open peril basis and may include coverage for property at off-site storage locations and in transit. The coverage limit on the structure is often based on the total estimated completed value.  However, the rates for new construction can often be less than completed building rates due to the smaller exposure in the early stages of construction.

So what types of property coverages are typically covered? (sub-limits may apply)

• Building materials and supplies which will become a permanent part of the building
• Foundations and Excavations
• Scaffolding, construction forms, or temporary fencing
• Soft Costs
• Transit

Exceptions to the above may apply for Remodeling and Renovations projects.

Another important feature is coverage for “soft costs” which are costs arising from a delay in completion due to loss from a covered peril. Examples of soft costs would include additional advertising expenses, overtime, and additional fees for architects.

A Builder’s Risk policy provides a lot of protection for a small amount of premium.  Due to the specialized underwriting for this exposure, it is very important that you contact your independent agent promptly when planning a new or renovation exposure.

The information above is of a general nature and your policy and coverages provided may differ from the examples provided. Please read your policy in its entirety to determine your actual coverage available.