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Commercial construction is a nearly $90 billion industry. So, what happens if there’s an issue during the building process?
Let’s say, for example, an office building suffers hail damage during construction. This affects the timeline and requires extra money to repair the damage. Who’s responsible for covering it?
This is where builder’s risk insurance comes into play.
Also known as course of construction insurance, this temporary policy helps protect projects from property damage due to certain factors.
Keep reading to learn more about a builder’s risk policy and the benefits of having one.
What Does a Builder’s Risk Policy Cover?
First things first, it’s important to understand what builder’s risk insurance does and doesn’t cover. It helps protect the following during the course of the project:
- Building supplies and materials
- Building equipment, either on-site or during transit
It also helps protect associated costs if damage to the property occurs, causing delays. These are known as “soft costs” and they include things like:
- Additional interest on loans
- Lost income or sales
There are a number of events that can cause damage or delays, but they’re not all covered by builder’s risk insurance.
Acts of God, like lightning, storms, and hail are covered. Other things that are out of your control, like vandalism or theft are also covered. However, poor planning, faulty design, and corrosion during the course of a project are not covered.
You’ll want to carefully review your policy for builders risk to see exactly what your coverage includes.
Benefits of Builder’s Risk Insurance
Now that you know more about what’s covered under a policy you might be wondering if it’s worth the extra cost. In short, the answer is yes, because of the following benefits.
Gives You Peace of Mind
Perhaps the biggest benefit of builder’s risk insurance coverage is that it can give you peace of mind during the course of your project.
You never know what might happen during construction, and anything that causes a delay leads to added stress. If you also have to worry about out-of-pocket costs on top of that, you’ll find yourself wishing you never got in the construction business.
Helps You Save Money
Sure, you have to pay for the insurance coverage if you choose to purchase a policy. But, the amount you’ll pay for coverage is nothing compared to the amount of money you might owe if something goes wrong and you don’t have coverage.
Why take that risk?
Helps Your Customers
When your customers hire you for their commercial construction needs, they’re looking to you as the expert.
If you have builder’s risk insurance, you can assure them that if something unexpected comes up, you’re prepared to deal with it in the best way possible. This builds trust between you and your customers and gives them a better building experience.
Don’t Leave Your Project at Risk
Before starting a commercial construction project, it’s best to prepare for the worst and hope for the best. By purchasing builder’s risk insurance, you can do just that. Now, if something unexpected comes up, you’ll have peace of mind knowing you’re protected.
For more helpful information like this, browse through our other articles before you go!