Brett Byland, ARM - EXT 110
Lauren Morris - EXT 120
Flipping a house? Hired to renovate or remodel a home?
Builders' risk insurance is first party property coverage on property under construction / renovation and designed to provide coverage for construction materials and equipment that are being used during the course of construction and renovation.
Although there is no standard Builders' Risk policy form, the coverage is typically written on an Inland Marine policy form with the intent to cover the construction materials and equipment on site, at off site storage locations and in transit.
The coverage can be written as one time reporting of property and material values or on a reporting form basis requiring updates to actual property and material values on a monthly or quarterly basis. One time reporting is commonly used for builders risk policies needing coverage on one property at a time. For large construction firms working on several properties at a time, a reporting form basis is typically used. The initial premium is adjusted as the updates to current properties and building materials are reported. The limits will be adjusted to provide coverage for the highest valued exposure.
The builders' risk policy will commonly include coverage for such perils as wind, hail, fire, collapse, debris removal, back-up or overflow of sewers, drains or sumps, valuable papers & records, pollutant clean up & removal, etc. Commonly there are exclusions for perils such as flood, earthquake or loss of use from delays. Some insurers may allow you to buy back coverage for those exposures.
Covered property is commonly defined as your property and borrowed property for which you are legally responsible; the foundations of buildings under construction and/or renovation; outdoor fixtures such as sidewalks, driveways, curbs and fences; and lawns you installed including plants, trees and shrubs.
Builders risk policies use the completed value of the project as the limit of insurance.
These policies will typically be written on a fully earned premium basis, meaning if you completed the project early and wished to cancel the coverage you would not receive any return premium. Because of this, carriers will often offer the option of shorter policy periods, such as 6 months, in order to reduce the premiums in situations where the project expects a shorter turn around time frame.