Builders risk insurance provides coverage for items and equipment being used for a construction project. There are many reasons someone may want to insure such items. While the equipment is left at the construction site overnight, it’s easy for unexpected weather to damage or even destroy it. This can set back a project heavily both in time and money. 

Covered projects can include commercial or residential ground-up construction, remodeling and installation. These policies can be purchased as blanket policies or for a single project. Builders risk insurance may be purchased by any entities that have stake in a construction project. This includes: 

Homeowners or Property Owners 

If a property owner hires a contractor (or contractors) to work on the property, the owner will want to protect the time and money spent on the project. Say you’re a homeowner who hires contractors to fix your shed. After the project starts, a storm sweeps in and soaks the wood. By the time the contractors are able to get back to the project, the wood intended for the shed is rotten and needs to be replaced. To avoid having to pay for completely new wood out of pocket, you as the homeowner and file a claim on your builders risk insurance policy for compensation to replace the wood and continue the project. 

Builders and Contractors 

On the other side, the contractors or builders themselves may want to carry builders risk insurance. If a scenario like the above occurs, some homeowners may attempt to seek compensation from the contractors or refuse to pay for replacements. In this case, the contractor could file a claim with their builders risk insurance policy to replace the lost or damaged items. This is especially important for equipment that is left out and damaged or stolen. Heavy equipment can be expensive, so it’s crucial for contractors and builders to have a way to replace them. 

Investors and Developers 

Investors and developers put a lot of money and resources into certain projects. Any interruption to these projects can cause financial loss and put the project behind. Builders risk insurance helps protect the investors and developers if an accident occurs during construction. In some instances, investors or project managers may require contractors to carry the insurance in order to fill out the contract. This often happens with large scale contracts or government projects. 

School Districts 

Schools are constantly developing to suit the needs of students and staff. Between adding football fields, new class wings, workshops and theatres, schools have a lot of construction to consider both before and after opening. Even school districts have limited budgets for these construction projects, however, and a builders risk insurance policy can help protect that budget by providing compensation if anything goes wrong during construction. 

Overall, anyone with financial stake in a project should consider purchasing a builders risk insurance policy. Before beginning a project or hiring a contractor, ask if the other party as such a policy in place. Many contractors will carry their own form of insurance in order to cover their equipment, but may not have coverage for items used for construction, such as wood. 

How Much is Builders Risk Insurance? 

Builders risk insurance premiums depend heavily on certain aspects of the project, including the coverage needed, risk involved and the cost of the project itself. Most policies are 1% to 4% of the total cost of construction. This means for every $100,000 for the construction project, a policyholder may pay between $1,000 to $4,000. Premiums may also depend on your location and the claims history of the policyholder.