Builders risk insurance, sometimes called course of construction coverage, is a specialized type of property insurance coverage designed to protect commercial or residential structures while they are under construction.
If you have a financial interest in a construction project, you need builder’s risk insurance. NJ property owners, contractors, developers, builders, municipalities and anyone else who could suffer a financial loss if the construction work was delayed for a covered reason can purchase this type of coverage.
What Builder’s Risk Insurance Typically Covers
The types of losses and perils a builder’s risk policy will protect against vary from insurer to insurer. Generally speaking, if you need builders risk insurance in NJ, you can expect your policy to cover losses from:
- Hail damage
- Lightning strikes
You may also be able to add optional policy coverage for damage caused by windstorms, flood waters and earthquakes. Other coverage options include covering “soft costs” (costs you would not have otherwise incurred but for the covered loss), business income and extra expense protection, coverage for the extra costs associated with “green” building, changes in construction materials midway through the project and more.
Insurance coverage protects the structure itself in the event a loss occurs during construction, but it can also protect construction materials while they are in transit or storage, scaffolding, debris removal and other expenses.
Choosing the Right Solution to Mitigate Risks
If you’re looking for builders risk insurance, NJ has no shortage of insurance agencies and carriers offering coverage. However, don’t make the mistake of thinking every carrier or agency is equal; they’re not.
Follow these tips to find builders risk insurance NJ property owners, contractors and others involved in construction projects can rely on:
1. Work with a Specialist
Builder’s risk coverage is a complex product. Working with an insurance agency or professional who only occasionally handles builder’s risk and other commercial insurance lines could leave you without the protection you need.
Every construction project is different. Your insurance professional should recognize this and be able to help you find insurance solutions designed to mitigate your specific risks.
Working with a knowledgeable, experienced builder’s risk insurance provider can also make the process faster and smoother, streamlining the underwriting process.
2. Understand What the Insurance Policy Will – and Will Not – Cover
Ask your insurance professional to help you understand policy coverages and exclusions. There are fairly “standard” builder’s risk policies, and every builder’s risk insurance policy has certain exclusions.
For example, builder’s risk protection does not extend to liability coverage, contractors’ tools and equipment, personal injuries at the construction site or damage to automobiles. But, some carriers’ exclusion lists are more extensive than others’. You don’t want the unpleasant surprise of learning that something you assumed was covered actually isn’t. Your insurance professional should be able to explain your coverage options to you, including what types of non-standard policy endorsements are available to meet your needs.
If you have multiple construction projects, can the carrier you are considering accommodate all of them under one insurance policy, or will you need to obtain a separate insurance policy and undergo underwriting for each project?
3. Look for a Stable Carrier
When you are evaluating potential builder’s risk solutions, don’t simply opt for the cheapest coverage. It’s important to evaluate carrier stability. If a catastrophic loss occurs, will the insurance company be able to weather the storm?
It’s also important to make sure the carrier can actually meet your needs. If you have construction projects in multiple states, it probably doesn’t make sense to choose an insurance solution that can protect you in some, but not all, of those states. Doing so would just mean you’d need to choose a different agency and/or different carrier’s products for projects in those other states.
4. Evaluate Claim Handling and Service
As with any type of insurance coverage, you buy builder’s risk insurance hoping you will never need to file a claim. But, if you do experience a loss and need to file a claim with the insurance carrier, how easy will that process be? And, how fast are approved claims typically paid?
You should also consider what kind of assistance your insurance professional/insurance agency will provide with helping you get payment for your claim and service your policy.
5. Understand When Coverage Begins and Ends
Finally, when you are evaluating builder’s risk insurance in NJ, be sure you understand when coverage under the policy would begin – and when it would end. Builder’s risk coverage is temporary, although you may be able to extend the policy term under certain circumstances. When coverage ends, it will be important to make arrangements for permanent property coverage.
Stay on Top of Your Builders Risk and Other Commercial Insurance Needs
When looking for builder’s risk insurance, NJ contractors, property owners and others with financial stakes in construction projects have options. Working with a commercial insurance agency can help make sure your potential risks are identified and addressed appropriately.