As an insurance broker, there may be times when you will have to provide builder’s risk insurance to your clients. Knowing the details of Builders Risk Insurance New York will enable you to provide the most appropriate coverage possible.
Builder’s risk insurance essentially provides insurance coverage for residential and commercial structures during the construction or renovation process. It may also apply to structures that are being remodeled.
Unlike most other insurance policies, builder’s risk coverage usually does not have a standard form or contract that your clients will fill out. Instead, the policy is typically included in a report or value form.
Builder’s risk insurance coverage
What does builder’s risk insurance cover? It is important to explain to your clients that this type of insurance covers only the structure, the machines and equipment, and construction supplies. In most cases, injuries or accidents that may occur on-site will not be covered.
The parts of the building that will be covered are the following:
- The foundation
- Building fixtures
- Machinery and equipment used for the building’s operation
- Materials and supplies
- Debris removal resulting from loss or damage
Builder’s risk policies typically do not cover the land or landscaping, scaffolds, construction trailers, antennas, satellites, or construction materials that are being transported. These plans also do not cover supplies that are stolen from job sites.
Although most builder’s risk plans do not cover the items mentioned above, your clients may purchase additional coverage for them at higher premiums.
With builder’s risk policies, plan holders pay premiums only on the assets on the property. If the house is worth $3 million, for example, with $200,000 in assets inside, clients will pay a premium only on the $200,000.
There is no labor law exclusion with builder’s risk insurance. In most cases, commercial property insurance provides more coverage than premises liability.
The builder’s risk insurance coverage form
As an insurance agent, you complete builder’s risk policies with any of the following:
- A reporting form
- A completed value form
- An inland marine coverage form
Furthermore, you could write builder’s risk coverage in one of two ways. You could either have the policy cover losses that are specifically listed or have the policy cover items other than those which are specifically excluded. Again, your clients could get coverage for these excluded items for an additional premium.
Like most insurance plans, builder’s risk insurance policies do not provide coverage for the following:
- Acts of war
- Government seizure
- Nuclear hazards
- Earthquakes
- Floods
- Mudslides
- Other extreme weather events
The limit of coverage
The limit of builder’s risk coverage is equal to the project’s value when completed. Your client will have to purchase insurance before the project reaches 30% completion. The plan should also specify a state of completion that will dictate the automatic end of the coverage.
Coverage may end early based on the following factors:
- When the property is passed on to the owner
- When a specific number of occupancy days are reached
- When the project is abandoned
- When no work is done on the project for 60 days
- 90 days after the completion of the project
In some cases, a builder’s risk policy may cover construction delays resulting from a covered casualty. Most such policies specify the minimum years of experience that the builders are required to have.
Parties covered by builder’s risk insurance
Builder’s risk insurance policyholders are usually homeowners or building owners. However, they may also be the contractor or developer of the property in question.
It is almost always best if the policyholder is also the property owner. This way, the owner will be the one to make a claim in the event of a loss. If the policy is held by the builder, contractor, or developer, they could file a claim and receive the money without turning it over to the property owner.
In most cases, the standard owner’s property insurance also covers items covered by the builder’s risk insurance. Most property policies specify the number of days that owners may leave the property and still get coverage. Depending on the type and extent of renovations performed, builder’s risk coverage may also be voided.
It is almost always in your client’s best interests to get builder’s risk insurance. If they require coverage for property undergoing construction or renovation, this type of insurance is essential.
About Snyder Specialty
Snyder Specialty, LLC is a New York-based underwriting facility that provides a range of property and liability solutions for personal and commercial lines. Specializing in coastal properties and hard-to-place risks, Snyder Specialty expands your current capabilities with proven solutions for complex risks. Find out more about the company’s range of services by calling (718) 362-8039.
