Builder's Risk  - I’m Covered, Right?

Whether you are a developer, owner, or contractor, a properly structured builder’s risk program is essential to the success of your project.

What do you do when you are going to construct a building and the bank requires a builder’s risk policy to be in place? Most people call their insurance agent.  The agent then asks, “What is the value of the building?”  After a couple of days the agent calls back and says, “The policy will cost X amount.” 

You are all set, right?

Actually, you may not be all set in the event of a significant loss. There are many components that can make up a builder's risk program.

For example:

• If your project is three quarters finished and you have a loss, did you have leases signed with tenants to begin occupancy on a specific day? What happens to those tenants when they cannot move in on time? Typically they go somewhere else. Will the loss of those tenants cost you financially? Most likely, yes.
• When there is a significant builder’s risk loss, the first thing you will need to do is clear the site to begin reconstruction. Does your policy provide adequate dollars to clean up and start fresh? If not, then this cost comes out of your pocket.
• Have there been any regulatory changes that have come into effect since your initial construction start date that you now have to account for in your reconstruction? Will you have to pay an architect or engineer to redesign your project to accommodate these changes?
• Building materials will be either stored at the site or off site. Does your policy cover these materials while they are in storage?

You can suffer a significant loss due to not being adequately insured while your building is under construction. At Hausmann-Johnson Insurance, we understand this.  We will adequately structure a builder’s risk program that protects you and your assets. Contact the Construction Group of trusted advisors at Hausmann-Johnson Insurance to find out more about builder's risk.