Major home renovation? Your homeowners insurance may need to change

hammer.jpgPlanning a major renovation to your home or new purchase? Maybe one that is so big you can not live in the home while work is done? What you may not realize is that your traditional homeowner’s insurance policies typically will not cover many common risks during this process. Instead, your agent should direct you to a Builder’s Risk insurance policy. It is important coverage that protects your investment from unforeseen risks, weather damage and material damage.

What Builders Risk Insurance Covers

Your builders risk insurance policy will often cover:

  • Property damage: Includes construction material, heavy machinery and equipment, temporary structures, cribbing, false work, fencing, scaffolding, construction signs and landscaping
  • Theft: theft of building materials
  • Labor costs and earned profits: Replaces labor costs, income and expenses
  • Perils of nature and man-made disasters: Hurricanes, fires, blizzards, severe hail storms, lightning, black outs, broken water mains
  • Other damages: Negligent workmanship, flawed materials or design

Some coverage will be part of a basic policy and other items will need to be added on. It is important that you work through the details of a policy beforehand with your agent.

What Is excluded from a Builders Risk Insurance Policy? What else do I need?

Note that these policies do not cover accidents and injuries at the workplace or liability risks. They will also often exclude certain acts of nature, such as earthquakes and floods. Typically you can buy liability, flood insurance and earthquake insurance separately. You should strongly consider acquiring separate liability insurance. Ask your agent about this important coverage.

Doesn’t my contractor’s business policy cover this?

You’ll need a policy if your contractor doesn’t have proper coverage. Be sure to ask your contractor what type of insurance he is carrying and what his limits are. You should get a certificate of insurance from your builder that is comprehensive and includes liability coverage even on completed construction operations. Whether you need insurance depends also on your contract with your general contractor and what that specifies.

How Long Does the Insurance Last? What do I do when my project is complete?

Normally the insurance lasts three, six or twelve months. The coverage ends when the building is completed or occupied. Once the work is just about complete, you should begin talking to your agent about a more traditional homeowner’s insurance policy so it can be lined up in time for completion.

Fast Claims

When you are on a strict construction timeline, getting fast claims service will be essential in order to complete your project and meet your budget.

The Advantage of Working with an Independent Agent

Whenever you take on a new construction project, it is important to have an independent agent on your team to help you minimize your “course of construction” building risks. Your agent will provide you with access to multiple companies and builders risk insurance policy options and advise you on how to customize the options to your specific construction project. We’d be happy to review your options for your given situation. We can be reached at 603-273-0953 or