Construction businesses in California encounter a series of risks ranging from fire, theft, vandalism, delays, and hurricanes, among others.
Consequently, parties in the industry may suffer financial losses due to lost sales, extra interest expenses, and other costs.
Builder’s risk insurance is an excellent backup plan that shields key factors like contractors or property owners from potential losses.
That said, acquiring a well-structured builder’s risk insurance policy is a crucial step in the risk management of your construction project.
Builders insurance protects stakeholders with a financial interest in a construction project. Interested parties include property owners, lenders, architects, contractors, subcontractors, and engineers.
A builder’s risk insurance covers the following risks:
What’s more, you can request a customized extension to cover the unique circumstances of your project: for example, soft costs, debris removal, temporary structures, and pollutant clean-up and removal.
Unlike general commercial liability cover that contains standard elements, builder’s risk insurance has exclusions. As such, look closely at your policy document to understand the coverage and exclusions.
Here are a few standard exclusions:
The builder’s risk insurance ranges from 1-5% of the total construction cost. In addition, each construction project has its unique needs and risks. Customized extensions mean more risk and higher premiums.
Here is the breakdown of cost determinants:
A point to note: An insurer can pay the actual cash value of the damaged property based on replacement value. Although the latter carries a high premium, it yields a better payout.
A typical construction project is capital intensive, implying risks can hit hard. Builder’s risk insurance is vital coverage that injects confidence in your operation. As such, it’s crucial to obtain your builder’s risk insurance policy from a trusted Insurance company like Northridge, CA Panorama Insurance Agency. Contact us today to get a quote. Call: 818-781-6630.