subject: 6 Critical Components of Midwest Construction Insurance [print this page] 6 Critical Components of Midwest Construction Insurance
Midwest construction insurance covers fiscal expenditure during the building phase of a home or commercial edifice, which in the Northern Plains states, carries with it unique challenges. Unlike homeowner's insurance (which protects completed, occupied buildings), Midwest construction insurance covers the developing project and purchase materials from damage or theft. It is also referred to as builders risk policy. Risks in the Midwest vary from other regions of the country as they are exacerbated by snow, freezing rain, blizzards, and subzero temperatures. Here we will explore six major aspects of this type of coverage.
Purchased prior to inception of the building process, Midwest construction insurance covers loss from fire damage, wind damage, blizzard, and other events not typically covered by the general liability insurance. Agencies will typically ask for a copy of the construction contract before issuing a policy.
Builders risk policies are effective for a term of one year or upon project completion, whichever arrives first. If this period is shorter than a year, the homeowner may roll the balance into a normal homeowner's policy or request a refund. If the project is still under construction at the end of the year, another policy must be issued.
Construction insurance does not cover the perceived or implied value of a project; only the actual expenses lost to damage. If a homeowner is building a $250,000 home but spends only $100,000 when a tornado or blizzard destroys the structure, he will receive $100,000, even if he feels the project has achieved a greater perceived value at that juncture.
Often homeowners mistakenly believe that a contractor is liable for damage caused to a home under construction. This is only the case, however, if the contractor or his workers exhibited negligence resulting in damage. The homeowner must protect his investment with a builder's risk policy.
It is best for homeowners to remain off the job in order to protect their financial interest in the project. Most Midwest construction insurance solutions exclude damage caused by the homeowner. Overzealous owners may believe they can assist the contractor by doing a bit of the work themselves. If they lack building knowledge, however, they can cause damage to the materials or the house. The policy may not reimburse the loss.
If weather damages a project while under construction, builders are likely to abandon the job unless a new price is negotiated that includes the extra work necessary to rebuild the home. In the Midwest, weather can be a particularly challenging aspect for construction as builders sometimes experience extended periods of inclement weather conditions.
Ultimately, the level of protection for a given project is determined by each individual homeowner (or business for a commercial structure). As there are many variations to the features and amounts of coverage available, it is best to find a trusted agency, ideally specializing in the region. Ask many questions, and evaluate the affordability of suggested premiums versus income level, risk factors, and other qualifications to arrive at a Midwest construction insurance policy that fits the needs of a specific project.
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