In recent years, the housing market has been chaotic, underscored by rising interest rates, record-low housing stock, and elevated home price tags. This turbulence has significantly increased the demand for housing, whether buying or renting. In a notable development, U.S. home building surged in May 2023, climbing 21.7% from April 2023, as low inventory in the existing home market continued to boost interest in new homes according to CNN. This uptick in residential construction underscores the importance of builder’s risk insurance in ensuring a Secure Building Future.
Builder’s Risk Insurance: Safeguarding Your Construction Projects
Also known as course of construction insurance, builder’s risk insurance provides coverage for buildings under construction. It’s a critical tool for property owners, general contractors, sub-contractors, lenders, or architects and engineers, playing a vital role in securing a building’s future. The policy helps protect buildings and structures during construction against perils like fire, lightning, theft, vandalism, explosions, or acts of God.
What Does It Cover?
A Secure Building Future requires protection for building and structures from the ground up. Builder’s risk insurance covers materials, supplies both on-site and off-site, or materials in transit. The policy may include coverage for lost sales, rental income, additional interest on loans, or real estate taxes, which are crucial for maintaining financial stability during construction. Some insurers also offer options to extend coverage to scaffolding, temporary structures, and the cost of debris removal and disposal in the event of a loss, as well as documents or data for damage to blueprints or specifications.
Navigating Exclusions for a Secure Building Future
While builder’s risk insurance is comprehensive, common exclusions include earthquake, flood, wind, wear and tear, mechanical breakdown, or damage due to faulty design. These policies are tailored to fit specific construction project exposures, and coverage forms vary by carrier. Understanding which coverages are included or excluded based on the policy is paramount for a Secure Building Future, ensuring that your project is protected against potential risks.
What is the Cost?
The policy premium is typically configured by the cost of the project, construction materials used, coverage amount or limits, and any coverage add-ons. Investing in the right builder’s risk insurance policy is an investment in a Secure Building Future, providing peace of mind through the construction process.
Coverage Inception and Expiration
Coverage is normally triggered once all contracts are signed or once the project “breaks ground” and is essential for a Secure Building Future. It usually ends once the policy expires, is cancelled, the building is occupied, or put to its intended use. Remember, builder’s risk policies afford temporary coverage for construction projects. Once the project is complete, property coverage should be purchased to insure the structure, marking the transition from construction to operational status.
As the housing market continues to evolve, prioritizing a Secure Building Future with tailored builder’s risk insurance policies will safeguard investments and contribute to market stability. Ensuring your construction projects are covered with builder’s risk insurance is not just about mitigating risks; it’s about laying a solid foundation for the future.
