Builders Risk For Homeowners: When Is It Needed?
Why should a home buyer purchase any other policy beyond homeowner’s insurance when undergoing new construction or a remodeling project? The short answer in determining whether homeowners truly need builders risk insurance is that there are often gaps in coverage when relying on the homeowner’s policy that may not be apparent until a loss occurs. At that point, clients can be in for some unpleasant surprises when they learn that their losses are not covered to the extent they anticipated.
Here are four advantages of using builders risk insurance in conjunction with an existing homeowner’s policy:
- Broad Property Coverage
Builders risk policies offer coverage that extends far beyond what inclusions typical defined in homeowner’s policies.
In general terms, the definition of covered property and losses can include the theft of building materials, property in transit, property in storage, and even property owned by subcontractors and suppliers. Builders risk can also cover damage to new paved surfaces and installed trees, lawn, shrubs and plants, and the expense of removing debris after a covered loss. .
- Endorsements Offer Additional Coverage Options
Builders risk policies can also provide coverage for damage caused by floods, wind storms and sewer or drain backups. Builders risk insurance offers a number of other optional coverages, including automatic coverage for change orders if the homeowner decides to upgrade building materials mid-construction, water intrusion coverage, and even coverage for the added cost that may be involved when using “green” building materials.
- Attractive Policy Terms
For homeowners purchasing coverage, a standard builder’s risk insurance policy term is 12 months on new construction projects, and the single structure policy can be renewed with underwriting approval. For remodeling/renovation projects, the policy term is six, nine or 12 months, and those terms can also be renewed.
- Minimize Claims For Homeowner.
Even if a claim occurs, the homeowner with separate builders risk policy does not need to worry about the risk of impacting their premiums or future coverage for their homeowner’s policy because coverage was secured under a separate policy unrelated to that homeowner’s insurance.
If you or your client are starting or considering new construction or remodeling projects, discuss with an agent at Sihle Insurance Group how builders risk insurance can help you protect your investment and avoid potentially costly losses not covered under their homeowners’ policies.