Is your company having a new building constructed or renovating an existing structure? If so, you need to consider purchasing a Builders Risk policy to cover the property exposures. Some commercial property policies include coverage for this exposure, but there are often limitations such as the following:
- A sublimit for newly constructed buildings.
- Limitations on coverage for building materials.
- Limitations or exclusions for time element coverages.
- Lack of willingness from the property underwriter to provide coverage for the exposure.
The solution is to purchase a Builders Risk policy. This is a policy that is designed to cover property in the course of construction. It is appropriate for new construction, a remodel, and renovations. While there is no single standard Builders Risk form, most forms provide coverage on an all risk basis and include coverage for property at off-site storage locations and in transit. The coverage limit on the structure is the total estimated completed value. However, the rates for new construction can often be less than completed building rates due to the smaller exposure in the early stages of construction.
Another important feature is coverage for “soft costs” which are costs arising from a delay in completion due to loss from a covered peril. Examples of soft costs would include additional advertising expenses, overtime and additional fees for architects.
Due to the specialized underwriting for this exposure, it is very important that you contact your independent agent promptly when planning a new or renovation exposure. This will allow them to place the coverage with the carrier with the best coverage and pricing for the exposure.
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