South Florida Contractor's Risk Insurance-what Is It?
South Florida contractor's risk insurance
, also known as builder's risk insurance, is policy coverage on any new construction project, from the first ground breaking to the project completion. Builder's risk insurance covers potential project disasters or set-backs such as property vandalism, material or equipment theft, arson or accidental fire, and damage caused by natural forces such as lightening and wind storms. Because of the comprehensive nature of the risks covered by contractor's risk insurance, it's known throughout the industry as an "all risk" type of coverage.
Why Contractors Need Risk Insurance
In most states contractors are not legally required to have builder's risk insurance coverage on their construction projects, however, due to the statistically high risk of material theft or property damage on any given construction project most of the lending institutions funding contractor projects nowadays do stipulate that a builder's risk insurance policy be in place before they will grant loan approval for a building project. Given the prevalence of construction projects that require full or partial funding from a loan institution, this typical lender's policy does make builder's risk insurance a mandatory factory in most construction and building projects, but that is not the only reason that builders are opting for contractor's risk insurance in South Florida.
Undertaking a new construction project is fraught is risk, and construction sites are frequently beset by unplanned environmental damage or accidents. Due to the necessary accessibility of construction zones, new building and development projects are also particularly vulnerable to malicious acts such as vandalism and equipment or material theft. Having an all risk coverage policy grants contractors some breathing space in the event of any of these common project setbacks, and provides much needed financial compensation for time or materials lost. Besides these typical coverage areas, South Florida builder's insurance policies can be individually tailored to include what is known in the industry as soft costs, or financial costs or losses that are peripherally affected by the building phase of a new construction project. Soft costs can include the costs incurred by leasing and project marketing, legal work, and accounting, as well as unforeseen financial burdens and interest increases.
Obtaining Contractor's Risk Insurance
As with any type of insurance coverage, the first consideration when looking for contractor's risk insurance should be finding an experienced and reputable insurance agent or broker with specific knowledge in this specialized area of coverage. When deciding whether to go with an individual agent or an insurance broker, consider that agents work for a single insurance company, while brokers work with a wide range of insurance companies. If you have found an agent and company that you really feel confident with, there is no downside to choosing to work with an agent, however, if you are still in the shopping around phase, the wider range of option available through working with an insurance broker can prove to be an invaluable tool in finding the best company and coverage policy for your particular building project needs.
by: Frank Kremlin
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