Builder's Risk insurance, also known as "course of construction" is a specialized form of insurance designed to insure buildings or projects against repair or replacement costs while they are under construction.The standard Commercial property policies were not designed to cover buildings in the course of construction hence the need for Bulders Risk Policies. This insurance will usually also cover build materials, fixtures and appliances all of which are intended to become an integral part of the structure under construction.
PROPERTY INSURED: This Form, except as provided, insures:
(a) Property in the course of construction, installation, reconstruction or repair
(i) owned by the Insured;
(ii) owned by others, provided that the value of such property is included in the amount insured;all to enter into and form part of the completed project including expendable materials and supplies not otherwise excluded, necessary to complete the project described in the Declarations for this form as “Description of project”.
(b) temporary buildings, scaffolding, false work, forms, hoardings, excavation, site preparation, landscaping and similar work, provided that the value thereof is included in the amount insured and then only to the extent that replacement or restoration is made necessary to complete the project;
(c) expenses incurred in the removal from the construction site of debris of the property insured, occasioned by loss, destruction or damage to such property and in respect of which insurance is provided by this Form.
For any items not listed above, an insured can usually add coverage through endorsements or by obtaining additional policies.
“All Risk” policies cover all risks unless they fall outside of the meaning of “occurrence” in the
insuring agreements or are otherwise removed from coverage by the exclusions. Examples of
typical risks covered by a Builder’s Risk policy include:
• Impact by aircraft or vehicles
• Riot, vandalism and malicious acts
• Windstorm, hail and rain
• Burglary and theft
When Does coverage Cease?
Builders Risk policies will not respond to a loss after the following, the building becomes occupied or is put to its intended use or if the building has been left unattended or no construction activity for 30 days coverage will cease.This is important information as buildings that meet the above conditions need to be insured under a different type of policy as a builders risk will not respond to a loss in these circumstances.
How much to Insure under Builders Risk Policy?
The amount of insurance should adequately cover the full value of the project in its finished state. If any change orders alter the completed value during construction the Builders Risk policy should be adjusted immediately.