The Benefits of a Builder’s Risk Policy

Those curious about the coverage obtained from a Builder’s Risk policy should speak to a Santa Fe insurance agency before they purchase a policy. Builder’s risk is a type of property insurance that protects against damage to buildings throughout the construction process, and it covers an individual’s or organization’s interest in materials, fixtures or equipment used during renovation of a structure if those items are lost or damaged. What’s important to know about this policy is that there is no standard, cookie-cutter Builder’s risk policy, so you will need to discuss the intricacies of a policy with your insurance agency before you can be covered. In the meantime, here’s a quick look at what you are likely to expect from a builder’s risk insurance policy.

Who Needs It?

The policy is typically purchased by the custom builder, general contractor, or property owner. Builder’s risk coverage may be necessary as proof of insurance, complying with the New Mexico and Santa Fe building codes, and is often a contract requirement. Some architects claim that it is the property owner who needs to obtain the builder’s risk policy since they pay for the improvements to their land.

If a builder receives the funds directly from a claim, they could take that benefit. Therefore, it is smarter for the property owner to have the builder’s risk policy themselves. If an incident happens during the project, then they should be in control of the benefits. This way the builders only receive funds to rebuild any damage.

If a project involves additions to an existing building, the owner’s existing property insurance may cover the work, which will require builder’s risk insurance. However, policies are dependent on the situation. A new building under construction on a vacant site may need additional coverage. Speak to a Santa Fe Insurance agency to find how you would be covered by a builder’s risk policy.

Why It’s Important

Buildings are subject to many different threats while under construction, ranging from damages due to fires to high winds and countless other unforeseeable events. Many times building renovations or improvements become property of the land owner or title holder. Builder’s risk insurance compensates for some of these losses.

What’s Covered

Builder’s risk covers a wide range of damage from fire, wind, theft and vandalism. Where your project is located in the Santa Fe area will impact what the specific policy endorses. These policies also do not cover accidents and injuries at the workplace and normally end when construction is complete.

Most Santa Fe insurance agencies will recommend that coverage be put into effect before any materials are delivered to the job site. Coverage comes to an end of when the sale is closing or after policy expiration. A sale or occupancy will result in the new owner needing permanent property insurance on the building, such as a homeowners policy or a commercial property policy.


About Daniels Insurance, Inc.

At Daniels Insurance, Inc., we have a unique understanding of the risks that businesses like yours face on a regular basis. With the backing of our comprehensive coverages and our dedication to customer service and quick claims resolution, your business will be fully protected. For more information, contact us today at (855) 565-7616.