Evan W. Horst Discusses Builders Risk Insurance

Posted June 21, 2024

Author – Evan W. Horst, Account Executive, Horst Insurance

Introduction:

Construction projects are stressful. Being the fifth generation of a family who made its name in construction, I have heard countless stories of anything and everything that can go wrong in a construction project.

The process of building a new building, rehabilitating, or adding an addition may lead to a myriad of problems. So how can this risk be mitigated? With insurance, of course!

Understanding Builders Risk:

Builders Risk, also commonly referred to as construction insurance, is a specialized version of property insurance. The intent of this line of coverage is to provide coverage for structures and buildings while they are under construction.

The coverage is in place to not only protect the building owner, but also the General Contractor and Subcontractors. Essentially, those with a financial interest in the project. The coverage will protect against direct physical loss or damages to the covered property, and materials and supplies that are on-site, in transit, or temporarily stored off site before they become permanently installed on the project.

So What’s Covered? Hard Costs & Soft Costs:

In any construction process, there are associated hard costs and soft costs. The real difference between the two are the tangible and intangible costs associated with property damage losses.

Some examples of the tangible (hard costs) that builders risk may cover include:

  • Utilities: electric, gas, and water
  • Construction tools and equipment
  • Building materials and supplies: block, brick, lumber
    • Onsite, in-transit, and temporarily stored
  • Building improvements- safety enhancements
    • Adding or updating sprinklers

Some examples of the intangible (soft costs) that builders risk may cover include:

  • Re-inspections and Re-permitting fees
  • Interest on construction loans
  • Re-work of Architectural and Engineering plans

Conclusion:

Builders Risk is a necessary coverage when a building or property is under construction. It allows all those with financial interest in the project a peace of mind knowing that when the inevitable goes wrong, that there are coverages in place. While every Builders Risk policy language reads differently, it is important to work with a broker that understands the ins and outs of your project and can put coverage in place for your specific needs.

For more information, please contact Horst Insurance.