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Traditional commercial property insurance protects you against theft, natural disaster and fire. Many policies also cover the loss of income or increase in expenses that result from the covered event. One type of insurance for a commercial property that you may not have thought of, however, is Builders Risk insurance.

What is Builders Risk Insurance?

Whether you are breaking ground on a new construction site or renovating an existing building, there are significant risks associated with your project. Builders Risk insurance covers all of your insurable interest in fixtures, materials and equipment against covered events such as wind, fire, theft, vandalism or natural disaster.

Often, the property owner on which the site is located takes out this type of insurance, but the contractor can also take out a policy. In most cases, the other party is added as a “named insured.” Considering that materials and equipment can be very costly, it usually makes sense to obtain insurance for commercial properties that protects you against unforeseen events.

Do Your Research

Each Builders Risk policy is unique and must be customized to fit the needs of the owner and the contractor. Furthermore, the laws that govern these policies vary from state to state. Therefore, it makes sense to consult with an insurance broker who is knowledgeable about construction coverage, and perhaps even an attorney to be sure you have every contingency covered. Once you do, you will lessen the chances of prolonged litigation in the event that human or natural disaster strikes.

In the end, accidents on the construction site represent the biggest risk. That’s why it is vital that you have full general liability coverage and that you are a named insured on the policy. If you are a contractor, you also need worker’s compensation coverage to protect your workers if someone is injured on the job.

If your assets are substantial, also consider getting an umbrella policy that increases your coverage to at least $1 million. While it will cost a little more, it will be worth it. Especially in a high-risk industry such as construction, insurance can protect you and help you sleep better at night.

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