Builders Risk Insurance

While many people recognize the importance of builders' risk insurance, most aren’t sure about what it covers, exclusions, and eligibility. Well, if your thoughts are clouded with such hazy thoughts, you can rest easy as Providence Insurance Agency shares insights about builders' risk insurance.

What is builders' risk insurance?

Also known as construction insurance, builders risk insurance is essential insurance coverage for any construction project in Arkansas. Whether the construction is complex or straightforward, builders and contractors should invest in builders risk insurance to protect their insurable interest in materials, fixtures, and equipment during construction or renovation.

While what this insurance policy covers differs from one policy to another, in general, this insurance protects construction projects against loss and damage from perils like:

Theft
Vandalism
Lightning
Fire
Hail
Natural calamities, like hurricanes, windstorms, and earthquakes

It’s worth noting that construction insurance, in itself, doesn’t cover liabilities emanating from injuries and property damage caused during the construction process. As such, you may need to purchase stand-alone liability coverage for better protection.

Who should buy builders' risk insurance?

Any person undertaking construction can purchase builders' risk insurance. However, the typical categories of persons that usually buy builders risk insurance include:

Property owners
Contractors
Lenders
Builders
House flippers
Architects
Sub-contractors

What are builders' risk exclusions?

While construction insurance covers you against various perils, it won’t protect you in the following scenarios:

Normal wear and tear, including rust and collision
Employee theft
Mechanical breakdowns
Workers’ theft
Damages due to flaw in the design
Acts of war or terrorism

Builders' risk insurance may also exclude flood and earthquake coverage for constructions in earthquakes and flood-prone areas. As such, double-check with your insurance agent to ensure you are adequately covered.