Risks always exist at any point in time that people are constructing property that will eventually be where they will run their businesses. Because of this, people have builder’s risk insurance to protect them against these many risks. This type of insurance falls under the property insurance genre, and it will compensate the policy holders after the insured properties have been damaged.
Who Can Be Covered under the Policy?
When loss occurs, many people can be affected by it. Even though these people are working on different portions of the building project, they can all be named on the same policy. Important people to be named on this type of insurance coverage are:
– The owners of the property
– The people who will construct the building
– The building’s contractor
What Can Be Covered under the Policy?
When people make the decision to purchase this type of insurance, several of the physical parts of the construction process will be covered under the policy in case they are damaged. The building does not need to be in construction; it can be undergoing repairs or improvement. Of course, it will cover the building before it has been built, during the construction and sometimes, after.
During the construction, the materials will need to be transported to the construction site. They may be vulnerable to several kinds of loss while being stored at this location, so they will fall under the protection of the insurance coverage. Specifically, the building that is being created, the tools needed to construct the building and the materials used in the construction of the building will be covered.
When the Insurance Policy Pays
A builder’s insurance policy pays after the property has been damaged by one of the several applicable named perils. Just some of these named perils are:
– If the building catches fire
– Vandals trespass on the land and destroy property
– Damaging winds
– Being struck by lightning
The Force Majeure
Insurance policies often mention the term, “Force Majeure.” Sometimes, the policy will exclude them, but there are times when they will be included as covered perils. If the building owners experience loss when extreme acts of force or accidents occur, they will be covered under this type of coverage. Examples of a Force Majeure are wars, riots or acts of natures, such as hurricanes, floods and earthquakes.