Builder’s Risk and Course of Construction Insurance
Builder’s risk insurance, also known as course of construction insurance, provides temporary coverage against damage or loss during construction and remodeling. It can be purchased for new builds and renovations. Builders risk insurance usually guarantees against fire, vandalism, lightning, wind, and similar forces.
Differences from Homeowners Insurance
Builders risk insurance differs from homeowners insurance in two ways. First, homeowners insurance only covers finished structures while builders risk also covers unfinished ones and construction supplies. Second, builders risk doesn’t cover job accidents, land, scaffolding, or theft. It only covers the building, equipment, and supplies against losses.
Builder’s Risk vs Course of Construction Coverage
Builder’s risk insurance and course of construction insurance refer to the same coverage. Insurance companies call it either "course of construction" or "builders risk" but it refers to the same policy and coverage. Anyone with a financial stake in the project can purchase it.
Key Information About Builder’s Risk Insurance
- Builder’s risk insurance is also known as course of construction insurance.
- It provides protection for property owners and contractors against losses due to damage or destruction of a structure under construction, renovation, or repair.
- Coverage includes protection against loss or damage due to theft, vandalism, natural disasters during a remodeling or building project.
- It covers building materials and equipment, liability for injury or damage to third parties, debris removal expenses, legal fees, business interruption losses, and pollution cleanup costs.
Responsibility and Ownership
- Coverage can be purchased by the property owner or general contractor.
- It may be necessary to show proof of insurance to comply with building codes and is often required in contracts.
- Many believe the property owner should have the policy, because they have paid for the land, and if the contractor receives claim funds, they could disappear.
- It is safer for the property owner to obtain the policy because they already own the building, even while under construction.