What is Builder’s Risk Insurance?

Builder’s Risk insurance helps protect your construction projects from certain kinds of property damage. It can also help cover additional soft costs, or expenses not directly related to construction, if property damage causes a delay.

What Does Builder’s Risk Insurance Cover?

Builder’s Risk Insurance covers the building, on-site construction materials , and liability in the event of loss or damage due to an insured event, such as fire, theft, or vandalism. A Builder’s Risk Insurance policy covers you from the beginning to the end of the project.


Case Study

Issue: The team from Fixco is hired to do a major restoration job on a historical home. Unfortunately, even though the project was locked down for the weekend, vandals broke in overnight and caused property damage to the tune of $100,000.

Outcome: Builder’s Risk Insurance covers the costs of repairing the damages and supports Fixco hiring additional contractors to complete the project on time.


Where Is The Risk?

There may be two sources in a construction project from where various risks are calculated – external or internal risks. External risks consist of environmental impacts. Internal risks consist of the uncertainties which exist within the project.

Safety risks, quality of work, faults, productiveness and competency are considered as the major risks in a construction project. Here are a few more types of risk you may run into:

Economic Risk: Often related to supply of labor and materials, availability of equipment, price of construction materials, exchange rates and inflation rates.

Financial Risk: Associated with cash flows, interest rates, credit ratings, rentals, etc.

Legal Risk: These are linked to contractual clauses, codes and regulations, and building procurement.

Managerial Risk: Connected with human resource management, productivity, cost and quality control.

Technical Risk: These are associated with the technical factors related with the construction process, such as technology failure, design failure, equipment breakdown, and a range of health and safety aspects.

Political Risk: Includes interference of government in day-to-day business, public unrest, industrial relations, and project approval delays are included in this category of risk.

Environmental risks: Deals with soil conditions, weather and environmental impacts. The effects of the project on flora and fauna, geological surroundings, and people will fall under environmental risk.

For construction companies, risk management plays a significant role in the decision making process. Risks can be reduced, transferred or held back, but never eliminated. Loss minimization is one of the main reasons companies and organizations adopt Business Risk insurance.


Common Policy Exclusions… and Your Click Insurance Solution

  1. Work vehicles…
    A business auto insurance policy will cover your valuable trucks and vans.
  2. Employee theft…
    Ask us about a crime policy to protect your assets.
  3. Flawed workmanship…
    For a complete package, your builder’s risk policy should have an accompanying general liability insurance policy.


Who Needs Builder’s Risk Insurance?

Typically, Builder’s Risk coverage is purchased by a property owner, general contractor, or any individual or business looking to build or do significant renovations. Not only is it a good idea to protect yourself and your property, but proof of Builder’s Risk insurance may be necessary to comply with local city, county, and state building codes. In a homeowner/contractor scenario, the prevailing theory is that the policy should be owned by the homeowner. If something untoward happens to the unfinished project, then the homeowner would control the insurance benefit.

Your construction project is a huge investment of time, effort, and money. Protect your final product and your bottom line with a Builder’s Risk policy, with the guidance of our insurance experts at Click Insurance. Call us at 617-580-3499 to get started.