Statista reports there were 853,000 single-family home building permits issued last year. Over the course of the last decade, the number of new homes built has steadily been on the uptick. Perhaps you’re also about to embark on the exciting journey of building or renovating your own home.
Once you finally get the keys to move into your new abode, you’ll be sure to have all the proper home insurance coverages in place to protect your dream residence. However,
have you considered the importance of protecting your home during construction too?
If not, then you’ll be glad to learn all about the benefits of Builder’s Risk Insurance, also known as Course of Construction insurance.
What Does Builder’s Risk Insurance Do?
Builder’s Risk Insurance gives financial protection to those parties involved in the construction of a new property or renovation of an existing property. Usually the property owner will take-out the coverage and be the primary insured. Then the insured can add others onto the policy if they have an insurable (financial) interest in the building, like the home contractor, architect and the mortgage lender.
Course of construction policies can cover the cost of damaged or destroyed building materials, equipment, fixtures, and the actual structure if it’s compromised by extreme weather, fire, vandalism, or theft. Usually a builder’s risk policy won’t safeguard your project from employee thefts, earthquakes, and floods.
Keep in mind, the policy is taken out only for as long as construction is happening.
Usually you can pick from a specific term like three, six, or 12 months. Most insurance companies will let you extend the coverage at least once. This is to help you out if your building/renovation drags on a bit longer than expected.
What Does Builder’s Risk Insurance Cost?
Course of Construction insurance premiums generally range between 1% and 4% of your total construction costs. For example, if your project is $200,000 then you could possibly pay between $2,000 and $8,000 for a builder’s risk plan.
The Builder’s Risk insurer will take into consideration several different factors when determining the appropriate percentage. Things like the type of construction project (cosmetic renovations versus major renovations such as adding floors and extensions to the structure), total construction costs (how much you will be putting into the construction/renovation of the structure), materials, location, and shape of the building will all influence your final premium.
Do You Need a Builder’s Risk Extension?
You may find a basic Builder’s Risk policy isn’t quite enough and you’ll need additional coverage for your building project. If so, it might be worth buying an extension or endorsement for things like:
- Temporary construction forms or structures
- Pollutant cleanup
- Debris removal and disposal from a covered loss
- Scaffolding
- Upgrading the construction site to “green” environmental standards
For more information and to purchase a Builder’s Risk Insurance policy today, contact Gonzalez & Co. Get a quote or talk to an agent.