If you’re building a structure, it pays to protect it and your interests should anything unfortunate happens during the construction. Builder insurance provides coverage for the owner of a property being built. This covers losses from theft, vandalism, fire, lightning, and other related incidences that could happen during the construction. It is usually the property owners who need to purchase this type of coverage although sometimes the contractor may be required to obtain this coverage in the initial contract.
What it covers
Building insurance policy covers a number of things. Along with the structure on site, the coverage extends to building supplies and materials. It covers the materials as they are being transported or while at a temporary site. Depending on the size of your project, you can get additional coverage in the event the ground should move due to excavation. Flood and earthquake coverage is another optional coverage.
Apart from damage to the actual structure, a building insurance policy can cover damages to the contents of the property. If any of the contents are damaged in a fire, for example, the policy will cover the cost of their replacement. For additional protection, you may also get builders tools insurance to cover damaged or stolen work tools.
Determining the premium
As with other insurance plans, the insurer will take into account several factors when calculating the monthly premiums. This would include risks associated with the project, materials to be covered and the amount applied for before the issuance of a premium offer. The premium amount will depend on the insurance company’s evaluation of your submitted information. After that, you are responsible in making the regular premium payments to maintain the coverage.
The coverage limit must match the total completed value of the property being built, including the materials and labour costs and excluding land value. The best way to determine the limit is by referring to the construction budget.
While your contractor may ensure that everything is going well at the project site, some things that are beyond their control might still happen. To be sure, you may purchase a builders insurance policy to cover possible damages up to the limit of the coverage.