Builders risk insurance is an essential policy for New York contractors, as it provides coverage for projects under construction, protecting against losses due to property damage, theft, and other unforeseen events. However, not all builders risk policies are created equal. To make sure you are properly covered, here are 10 key factors to consider when purchasing builders risk insurance:
1. Scope of Coverage
When buying builders risk insurance, the first thing to examine is the scope of coverage. A good policy will cover damage caused by fire, vandalism, theft, and natural disasters such as windstorms or hail. However, some policies may exclude certain perils, such as earthquakes or floods, which may require additional endorsements. Always check what is included and excluded from your policy to ensure comprehensive protection.
2. Project-Specific Coverage
Builders risk insurance should be tailored to the specific needs of each project. For example, the coverage for a residential home build may differ from a commercial high-rise project. Make sure the policy aligns with the specific risks and requirements of your project, including the project’s value, size, and location.
3. Coverage for Materials and Equipment
It’s crucial that your builders risk policy covers materials, supplies, and equipment, both on-site and in transit. Since construction projects often require materials to be delivered before they are installed, you need to ensure that those items are protected while in storage or during transport to the job site.
4. Soft Costs Coverage
Soft costs refer to expenses that aren’t directly related to labor or materials, such as architectural fees, permit costs, and loan interest. If a delay occurs due to a covered event, you could face additional soft costs that can add up quickly. Make sure your builders risk insurance includes coverage for these types of expenses to protect your bottom line.
5. Coverage Duration
Builders risk policies are generally written for the duration of the project. However, if there are delays or project extensions, you’ll need to make sure your policy can be extended as well. Check with your insurance provider to understand the terms for extending coverage if the project takes longer than expected.
6. Valuation Clause
The valuation clause determines how losses are calculated. In some cases, the insurer may use replacement cost, while in others, they may use actual cash value, which accounts for depreciation. Make sure you understand the valuation method in your policy and how claims will be paid out in the event of a loss.
7. Named Insureds and Additional Insureds
Make sure that all relevant parties involved in the project are covered under the builders risk policy. This often includes the property owner, general contractor, subcontractors, and sometimes even lenders. If required, ensure that the policy allows for additional insureds to be added.
8. Exclusions and Deductibles
Every builders risk policy comes with exclusions and deductibles. It’s essential to understand what is excluded from the policy—common exclusions include damage caused by wear and tear, faulty design, or poor workmanship. Additionally, be clear about the deductible amounts for different types of claims, as this will affect how much you pay out-of-pocket in the event of a loss.
9. Legal Requirements
In New York, certain legal requirements may dictate the type and amount of builders risk insurance you need, depending on the scope and location of your project. For example, local building codes or lender requirements may impose specific insurance obligations. Work with an insurance expert to ensure you meet all legal and regulatory requirements.
10. Claims Process
Understanding the claims process is crucial for contractors. Some insurers have a straightforward claims process, while others may have more complex procedures. Before purchasing a policy, ask about how claims are handled, the timeframe for processing claims, and any specific documentation that will be required in the event of a loss.
BGES Group: Your New York Construction Insurance Experts
Navigating the complexities of builders risk insurance can be overwhelming for contractors, especially when balancing project demands. That’s where BGES Group comes in. With years of experience specializing in New York construction insurance, we know how to tailor policies that fit your specific needs, ensuring you have the right coverage for your projects.
If you need help selecting builders risk insurance or any other construction-related coverage, contact Gary Wallach at BGES Group. We’re here to provide expert advice and personalized service to protect your business.
Reach out to Gary Wallach at 914-806-5853 or via email at bgesgroup@gmail.com for assistance today!