What is Builder's Risk Insurance?

Existing buildings are exposed to a wide variety of threats—fire, flooding, and vandalism are just a few of the ways building structures can be harmed. However, buildings under construction aren't ready to face risks that completed buildings can withstand. There's also the chance of an accident during the construction phase, like materials being destroyed or installed incorrectly. A proper risk analysis from our Encore Insurance Group of Omaha agents can help reduce the number of threats a new construction faces, and our agents can help reveal additional threats that may need to be covered by additional policies.

Builder's risk insurance is a policy designed to mitigate the chance of loss and protect you in the event that damage is done to the building. This policy is most commonly purchased by landowners and those funding the project, although some contractors purchase it in order to have more control over how each job is insured.

This policy is mainly designed for new construction, rather than changes and improvements to existing buildings. That form of construction is usually covered by property insurance and does not need any additional coverage, although it's best to talk with an agent before starting any particularly large project just to be absolutely sure it's covered.

What Does Builder's Risk Insurance Cover? What Does It Not Cover?

Builder's Risk Insurance generally covers the owner, the lending institution, the contractor(s) performing the work, and other related parties. In addition to providing coverage for damage to the building itself, most plans also cover temporary constructs (like scaffolding), materials, and equipment being used (whether it's currently on-site or off-site). The majority of policies are written on an all-perils basis, which means that reimbursements are available for any losses except those specifically excluded.

Common exclusions from this coverage include (but are not limited to):

  • The value of the land itself
  • Employee theft
  • Damages beyond the estimated value of the construction
  • Any losses brought by law or ordinance changes
  • Damage from earthquakes
  • Losses from war, nuclear hazards, or actions by civil authority

As you can see, most of the exclusions are not likely to occur during the course of a normal construction project. The value of the land is the only one likely to change as new work is done, and you will likely need to account for any improvements or losses the next time your company prepares taxes.

Builder's Risk Insurance Policy Lengths

Most policies last until the building is no longer under construction. The exact point at which this occurs can vary—it may be when certain parts of the structure are done (but finishing work, like painting, has not been completed), up to the day it opens for business, or when the contract with the construction company ends. If you're worried about interim risks—like the building being damaged between when construction finishes and when it opens for business—talk to one of our agents and ask about extending your coverage.

 

1. "Threat/Vulnerability Assessments and Risk Analysis." WBDG. Accessed April 20, 2016. https://www.wbdg.org/resources/riskanalysis.php.

2. "Who Should Buy Builder’s Risk Insurance?" BuildingAdvisor. Accessed April 20, 2016. http://buildingadvisor.com/who-should-buy-builders-risk-insurance/.

3. "How Do I Account for Land improvements?" Questions & Answers - AccountingTools. Accessed April 20, 2016. http://www.accountingtools.com/questions-and-answers/how-do-i-account-for-land-improvements.html.

Encore Insurance Group of Omaha

11929 Elm St., Ste 11

Omaha, NE 68144

Main office: 402-552-8700
Fax: 888-449-8414

Office Hours:

Mon: 9:00 AM - 5:00 PM
Tues: 9:00 AM - 5:00 PM
Wed: 9:00 AM - 5:00 PM
Thurs: 9:00 AM - 5:00 PM
Fri: 9:00 AM - 5:00 PM
Sat: By Appointment
Sun: Closed

Our Providers

Testimonials

Prompt service, courteous, professional, correct information provided! Amazing individuals to work with! Am so glad to have the opportunity to have Encore Insurance Group in my corner!
Sarah J., customer since 2013
Your customer service and responsiveness were greatly appreciated in helping us find insurance coverage for home and auto with like coverage at lower rates.
Mark J., customer since 2016
You are always there for me when I have an insurance problem and help explain everything to me. I appreciate how you've taken care of me over the years and continue to do so.
Betania L., customer since 2013
Always doing what's best for the customers
Juan H., customer since 2014
Great customer service! Prompt feedback on questions or concerns, always looking for best options available to us. Makes us feel like we are part of their family.
Customer since 2012