Builders Risk Insurance Why Do We Need It Exactly?
We all insure buildings against fire or natural calamities after they are complete and we move our furniture and valuables in there
. But who can help us is we build a home and it catches on fire while in the process of construction? This is the exact reason why we need builders risk insurance.
Builder's risk insurance covers a building or other type of structure while it is under construction. Many lenders will not provide financing for a project unless this type of coverage is in place. The policy provides protection from a loss resulting from fire, acts of vandalism, or wind damage. Other types of losses, such as flood, earthquake, or terrorism, may be added to the policy, if desired or needed. To asses a building risk insurance, you firstly need to ascertain if the business risk policy covers building materials and supplies on the job site, in storage and in transit. Materials should be insured installed and uninstalled.
Secondly, check to see if temporary structures, foundations and excavation sites are adequately insured by the business risk policy and then you must ensure equipment, scaffolding, fences leased and owned by the contractor are covered on site and in transit. Remember if disaster strikes, you may be responsible for lease payments on destroyed equipment. Your builders risk policy should provide coverage for this eventuality.
To make sure the money is rightfully stated you need to confirm costs relating to design error, faulty workmanship, changes in laws and other costs relating to business interruption are covered by the business risk policy. Check twice every stated cost and get the property correctly valued at fair value or market price by an expert. The point here is not to get ripped off by your potential clients. There have been cases of improper evaluation that lead to giving up more money than the property was worth.
To sum all this up, a builders risk insurance is unavoidable if you want to cover all basis in making sure your home or business venue is properly taken care of. The building owner is usually responsible for buying builder's risk insurance. The contractor on the project may be added to the policy as a named insured. Under this type of policy, the building or structure itself is insured against loss. Any materials or supplies on the job site will also be covered while the policy is in force.
by: crescent
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