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Mann Insurance Agency has a blog which is constantly putting up content on the web for our customers to gain knowledge. Knowledge of the industry is one of our core strengths. Please review all of our blogs to see the authority of content that we post here. More... |
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Builders Risk Insurance Coverage Explained If you build or develop residential or commercial structures, you'll need Builders Risk insurance coverage. This policy covers property and materials while the structure is under construction. In general, Builders Risk covers materials at the job site prior to installation, materials in transit intended for the job and the value of the property while it's being constructed. Coverage can be written for new construction or specific projects such as a room addition or basement remodeling. Covered perils for Builders Risk include: • Fire • Windstorm • Lightning • Hail • Theft • Vandalism • Collapse (limited coverage) Since the policy uses the special form coverage used in commercial property policies, exclusions (what's not covered) will be listed. Standard exclusions include: • Earthquake • Employee theft • Water damage to property in the open • War • Government Action • Voluntary parting • Mechanical breakdown The intent of this policy is to provide coverage for sudden or accidental events. So, damage resulting from faulty design, planning, workmanship and materials will also be excluded. You can also purchase coverage extensions such as: • Debris removal (resulting from a loss covered on the form) • Fire department service charges • Scaffolding, Construction Forms and Temporary Structures (at reported locations) • Property in transit (while being transported to a job site) • Sewer and drain backup (resulting in water damage) Who is covered? Usually, the named insured on builders risk is contractor or developer of the property. The builder must qualify with building experience. If the builder qualifies in some cases, a home or building owner could be the named insured. A mortgagee or lien holder can be added as an additional insured usually for no charge. When is the best time to purchase coverage? Rates for Builders Risk insurance tend to be discounted because when construction begins, minimal property exists. However, if you wait until the structure is 30% complete, you may experience "special underwriting". This could result in increased rates or even denial of coverage. And if you wait until half the work is complete, it might be impossible to find any Builders Risk coverage. So, it's a good idea to purchase this coverage at the onset of the project. Policy periods can be six, nine or twelve months renewed until the completion of the project. While contemplating the above list of included and excluded coverages, please keep in mind that Builders Risk insurance is not written on a standardized coverage form. This means that actual coverages can vary widely from company to company. That's precisely why the independent insurance agent exists. To help guide the insurance buyer- especially with non-standard coverages like Builders Risk. Because the independent agent represents several companies, you're sure to receive the right insurance coverage you need for your construction project. Jack Mann Mann Insurance Agency 3108 S. Rte. 59 Ste. 124-175 Naperville, IL 60564 Phone: 630-375-6080 Fax: 630-375-6087
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