One of the questions we got this week at the office was does my homeowners cover me if I am building a new house? The answer is no, unfortunately. There is a specific policy you will need when building a new home, and that is a Builder's Risk policy. I thought this might be a good time to do a little Q&A to explain the ins and outs of a builder's risk policy. As always, it is best to consult a licensed agent to get exact coverage information.
What is a Builders Risk policy? Builder's risk insurance provides protection from physical loss and damage that may occur to materials, fixtures, appliances, and more during construction from the time the ground is cleared to the installation of the final finishes.
What do I do if I have a loss when building my house? It is the same as any other claim - call your agent or company and file a claim. The sooner you notify them, the faster you can get paid.
What does a Builders Risk cover? The policy covers structures under construction, materials installed, or to be installed at the job site. Protection from perils like theft (if requested), vandalism, fire, wind, hail, and collapse. Earthquakes and floods are not automatically covered but can be added upon request.
When do I need to make my policy effective? You should obtain a builders risk policy before beginning construction to ensure that your project is covered. Your bank will usually require it at the closing of the loan. As soon as materials are delivered to the job site, your builder's risk policy starts protecting you.
How much coverage is needed for my Builders risk policy? It needs to be the total of the entire project.
What does a Builders Risk policy cost, and how is it determined?
The cost for builders' risk insurance will vary depending on several factors. The rate is calculated based on factors such as:
The premium is then calculated based on the rate and total limit of insurance.
What if I am remodeling a structure and my project is not a new construction? You will need a remodeling builder's risk or course of construction policy. It is different from new construction, so make sure you purchase the correct one.
What is a remodeling Builders Risk? Builder's risk insurance for renovations provides protection from physical loss and damage that may occur to materials, fixtures, appliances, and more.
Before you start building, please consult your agent. If you have any questions please feel free to call us at Block Insurance, and we will be more than happy to help in any way.
As always, the more you know about your coverage, the better off you are!