Home Builders Insurance Options

There are many myths and facts that surround home builders insurance. Let us tackle some of these here. Remember that the more you know about it the better able you will be to choose the type that is right for you.[br]

There are many myths and facts that surround home builders insurance. Let us tackle some of these here. Remember that the more you know about it the better able you will be to choose the type that is right for you.[br]

It is a myth that this kind of insurance is only meant for builders and is only purchased by builders. The fact is that this kind of insurance, also sometimes called home builders insurance is acquired by a builder but is issued to a homeowner in order to protect the homeowner against losses. These losses can relate to anything from defects, non-completion of work, and breach of statutory warranties by the person or company hired to do the building. This kind of insurance is required by law before a building project gets underway. This insurance goes into effect if a builder dies while doing his job, or if he disappears or becomes insolvent during the interim of a construction project. 

Home builders insurance does not cover defective work or contractual disputes that occur while a builder is in business. In most instances these kinds of matters are taken care of through tribunals by way of consumer protection legislation.[br]

Why do you need this type of insurance any way? You need it because it is a necessity for the builder’s registration. This kind of warranty insurance also establishes confidence for the consumer in this particular industry. It also makes it a certainty that a builder follows the proper building standards. What this doe is it builds a solid reputation in the minds of the builder’s current and future customers. Finally, it recognizes the importance of the economic side of the residential building industry.

A builder must apply for home builders insurance from an insurer in order for the work he does to be covered. In most cases the certificate for insurance is approximately 0.5 percent of the value of the contract. The price for the insurance is transferred to the homeowner when the total price of the contract is decided upon.

It is also a myth that the eligibility requirements are very unfair. The truth of the matter is that if a builder goes broke while in the middle of a project, be it large or small, nobody wins. That is why having this insurance is so beneficial in terms of protecting the interests of the homeowner. The insurance minimizes the chance that a builder will cave in during work and it also encourages only the most financially viable builders to have access to what the insurance has to offer.