Builders Risk Insurance Coverage - A Fundamental Overview (9)
Builders Risk Insurance Coverage is a type of insurance, which is being used by organizations in the remodeling and construction industry. This type of coverage is used for offering protection both for accidental and natural damage caused in a construction site. When it comes to purchasing this type of policy, different factors like the type of coverage needed are to be considered.
This kind of coverage is normally particular to the construction projects and they are purchased by building owners for going hand-in-hand with their construction liability insurance.
Builders risk insurance coverage has the capability of protecting the building contractors against loss caused due to hazards like wind, lightning, vandalism and even fire. It also protects against salvage and clean up operations. However, they do not cover damages caused due to floods, earthquake or due to some intentional activities of the property owners. Also, it will exist only until the construction in completed and it will cover only the particular people working in a building project. These people include architect, owner of the building, sub-contractors and general contractors involved in the project. Even, loss to the mortgage company that offers finance for the project is covered by this policy.
This type of insurance policy is classified into two types being specified peril and all risk. As from the name, specified peril covers only those risks that are listed in the policy. On the other hand, all risk is just opposite, as it will cover every risk involved in the construction site, except those excluded from the policy. However, the second type will cost more for the property owners since it offers a wide coverage against different risks.
So, builders risk policies are highly essential for any construction project in which a contractor is involved. Some of the financial lenders and municipal building codes do not approve building projects does not have this type of coverage.
It would be safer for contractors to ensure that the owner of the property, who is in need of a remodeling work or the owner of the land, who is looking for a new construction has a risk insurance policy with him before agreeing to begin the work. Also, the contractor should ensure that there is construction liability insurance so that he can get paid in the case of any unforeseen happenings in the construction site either for themselves or for their sub-contractors or workers or architects.
Like life insurance, this type of insurance is also essential for people, who have recently begun their construction project or planning to start one.