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Tips For Saving Money On Builder’s Risk Insurance

If you’ve made up your mind to have your dream home built from the ground up with you at the helm acting as the owner builder, you’re embarking on a rewarding journey. The prospect will be fraught with challenges, no doubt, but going this way can save you thousands over the course of construction. The adventure, however, will require that you not only learn a whole lot about the process of building a home, but also the insurances that should be in place during this time. Builder’s risk policies are just one of many you might want to consider as your dream home becomes reality one wall at a time. There are some specific things you need to know about builder’s risk before deciding if this type of policy is the right way to go. Sometimes it might be all that you need to cover your property, but in many cases it’s just a piece of the overall coverage package you should have in place to protect you, your property and your investment while construction is ongoing. There are several questions about builder’s risk insurance that owner builders often ask. Understanding their answers can help you determine the best course for cost savings. What Is Builder’s Risk Insurance? This is a specific policy that is generally put into effect while construction is ongoing. It will not cover damages that occur before or after the construction process. What Does Builder’s Risk Cover? A builder’s risk policy typically covers any and all risk, such as theft, accidental loss, vandalism and destruction, of the property itself. It generally applies to structures on a specific property and not the property itself. What Doesn’t Builder’s Risk Cover? Builder’s risk insurance is meant to protect property and not people. While this type of policy will help with replacement costs if damage occurs to a building under construction, it will not cover people injured in an accident or other types of liability that may arise during the course of building. This type of policy is generally purchased by contractors personally to cover their investment in a property that is under construction. The policy, for example, will protect contractors if their materials or completed work happens to be damaged prior to turnover and payment from a homeowner. What Do I Need To Purchase Builder’s Risk Insurance? An insurance underwriter will need several things from you if your intent is to buy builder’s risk insurance to protect your property during construction. The piece of information that will be essential for purchase include such things as: • The total estimated cost of the project. • A complete description of the project, including blueprints and floor plans. This will help an underwriter make certain the proper coverage is in place. • The location of the construction. • The anticipated phases of construction and the targeted completion dates for each phase and the overall project. Is Builder’s Risk Really Necessary? Builder’s risk insurance is considered essential whether you’re building your home yourself or you hire a contractor. This type of insurance will protect your investment in your home or protect your contractor’s investment. As an owner builder, you might be able to save yourself some money on this type of policy by purchasing builder’s risk along with other necessary coverage. It can, for example, be purchased along with course of construction insurance. It is not uncommon for course of construction policies to include a builder’s risk component, especially for owner builder policies. Course of construction goes beyond the actual property to include such things as protection against: • Liability – It is a very good idea to have liability coverage on a property during the course of construction. This protects people from accidental injuries that may occur while they are on the jobsite. • Materials losses – Course of construction insurance will generally protect materials and items needed for construction. Having builder’s risk and course of construction insurance in place will likely be a requirement of a mortgage company. Whether you are financing your dream home or not, however, it’s a good idea to have coverage to protect your own investment. Money Savings Are Possible Saving money on builder’s risk insurance is possible if you shop wisely. It is important, however, to make sure you don’t shortchange yourself on coverage just to save a few bucks. To get the best policy for the lowest possible pricing, make sure to: • Obtain multiple quotes – Never settle for the first policy offer you receive. Take the time to obtain at least three quotes to get a good idea of the costs involved in purchase. • Check into company backgrounds – Make certain the quotes you are obtaining come from reputable insurance companies. It does you no good to have coverage that won’t pay out when you need it to. • Be certain you are getting the right coverage – Builder’s risk and course of construction policies are often required by the terms of your mortgage agreement. Be certain you understand what is required and purchase accordingly. Builder’s risk insurance protects your property while construction is under way. Having this type of coverage in place is essential for protecting your investment and helping make certain the construction process on your dream home doesn’t turn into a nightmare.