Builder’s Risk Insurance is a special type of insurance in which covers the risk of damage to buildings while they are under construction. As the name suggests, this kind of insurance is related to the Builders. Builder’s risk insurance covers the interest of builders in materials, fixtures and equipment used in the construction from the physical loss. When builders construct building, they face several risks like catching fire, damaging with high winds etc. builder’s risk insurance indemnifies from this kind of losses.
Coverage of Builder’s Risk Insurance
As stated above, builder’s risk insurance covers the losses like catching fire and damaging by high winds. However, it does not cover the natural perils such as earthquake, floods or winds in the beach zone unless it is specifically stated in the terms of the insurance policy. As name suggests that this policy is for the builders, so the coverage period of the policy ends as soon as construction is finished. When the construction work on the property is finished, the responsibility part of the builder is also finished. So, there is no need of this kind of insurance in such cases. However, new owner of the property should get permanent property insurance since the property now in his use.
Who Buys Builder’s Risk Insurance?
Builder’s Risk Insurance is generally bought by the Builders but in some cases it can also be bought by the actual owner of the property. Original owner of the property buys builder’s risk insurance when the risk of property damage is under his area of responsibility. In order to claim the insurance money of Builder’s risk insurance, you only need a properly paid insurance policy. You don’t need to be a builder to claim any amount from the insurance company.
Builder’s Risk Insurance in Case of Renovation
If there is some renovation or addition to some current property by the builder, builder’s risk insurance will only cover the area of renovation or addition. Builder’s risk insurance will not cover the previous property since it should be covered by the permanent property insurance. It should also be kept in mind that during the time when construction work is going on, there are more chances of damage of property. So, it is always better if you go for permanent property insurance before starting the renovation work in your building. Even if some property is damaged, you can claim it from your insurance company.