Builders Risk insurance
You won't see this one advertised on by a foreign accented creatures but it's an important coverage for anyone building a home, commercial project or doing an extensive renovation. The homeowner or the builder can purchase this policy but if you're building a home in Santa Rosa Beach, Rosemary Beach, Alys Beach, Inlet Beach, Miramar Beach, (basically anywhere with beach in the name) you should have this policy. Here's why:
There's no other kind of policy that would cover it.
You probably have a General Contractor on the job, which is great. It adds a level of protection for anything he's involved in or his subcontractors because they should all have General Liability insurance. That liability policy is meant to cover you for things that are their fault while your property is in their care. Your contractor should be familiar with the drill and keep Certificates of Insurance for subcontractors throughout the project, it's important to have before anyone starts on the project.
But what if a storm rips the roof off or a lightning strike burns the house down before it's finished? Unless you can prove your cabinet guy has a lightning machine, you probably won't recover those damages from the contractor.
So here's where the Builders Risk policy comes in. Coverages come with many options but this policy is meant to cover a structure during the course of construction for physical damage. That means for things like Fire, Lightning, Wind, Hail, Theft, Earthquake, etc. You can imagine the risks are quite different from standard homeowners or renters insurance, so companies that offer this product are usually different from the standard homeowners companies.
Where to start
Your insurance agent should have access to at least one option for builders risk but the price can vary greatly so you'll want to make sure to ask for multiple quotes. A lot of projects on the coast will end up in the surplus lines markets with offshore companies you've never heard of but that doesn't mean it's a bad option. Many of these companies can be extremely strong international companies looking to diversify into some high-risk areas.
Be aware, some of these companies can offer you cheap rates but can be financially unstable. The state of Florida keeps an eye on the stability of insurance companies doing business in Florida and publishes ratings that we regularly review. There are some prominent companies used often in our area that would face serious issues if we got a direct hit from a hurricane. We avoid these companies but other agents wont, so make sure to ask about it.
Ground-Up and Renovations
We've already talked a little about General Contractors, if you have questions or concerns about their practices just ask. If you plan to manage the project yourself, consult with an attorney on the best practices to protect yourself. Start with certificates from anyone stepping foot on the job and getting a Builders Risk insurance policy.
What a lot of people don’t know is that renovation project would be better covered by a Builders Risk policy than anything else. A homeowners policy has very limited (if any) coverage for materials waiting to be installed and could deny a claim if the home isn't being lived in during the renovation or if it's too extensive.
Sometimes you can keep the homeowners policy you already have, which usually covers the finished portion, and get a builders risk policy for the value of the additions. Premiums start around $400 (as of the date of this blog) so it may not cost as much as you think.
Commercial projects, multi-family housing, retail, and more should also have similar coverage. We have a variety of options and coverage amounts for any project you may be looking at.
Coverage and options
Coverage up to 1 million is quite common, but we can usually get approval up to 10 million. If you're looking at a project bigger than that, call me because we'd be thrilled to work with you. The main factor in the price is the value of the structure but distance to coast and type of structure also come into play. Frame structures (wood studs) are common but also the most expensive to insure. Many builders are now using poured concrete with storm rated windows and doors. These options can save a ton on the Builders Risk and later on the homeowners insurance or commercial property policy.
Terms can vary from 3 months to 18 months, anything longer than that can be added by extension but 3 years is often the max. It only took 1 year and 45 days to build the 102 story Empire State Building, so if your house is taking more than two years something is probably wrong. Most companies will require the builder have 2 years experience but wont ask for much more than their name. Builders around here are all pretty good, their state licensing and continuing ed requirements make sure of that. Obviously, higher value projects will likely ask for more reference material.
This policy also typically protects materials, fixtures and/or equipment being used in construction of renovation or waiting to be installed. The causes of loss are pretty similar to policies you are familiar with but they might ask for some safeguards, like a fence, street lighting, installing material upon delivery, and so on. Also similar to homeowners, these policies can cover debris removal (especially nice after a big storm), trees and plants, fire department charges, and much more.
If you have questions about how this policy could work for you, give us a call and we'd be happy to chat. If you have questions about a quote you've already received, we'd be happy to offer a second opinion. Quotes are always free and usually have a quick turn around. We've insured large multi-story condominium projects and small single family homes on the Emerald Coast for over 35 years, so give us a call today!
Contact your agent for current pricing and eligibility. Each are determined by the carrier at the time of submission and minimums are subject to change.
The views expressed here are the opinion of the author and do not attempt to make any recommendation for insurance coverage. Eligibility is determined by the insurance carrier and not all applicants will qualify. Please contact your licensed insurance agent regarding your area's coverage and eligibility.