Builder Insurance and Liability

Builder insurance is a form of warranty insurance that is mandatory in some form or another in every state across the US. It sometimes goes by other names such as builder’s warranty insurance, builder’s risk insurance, builder’s indemnity insurance and statutory insurance.[br]

Builder insurance is a form of warranty insurance that is mandatory in some form or another in every state across the US. It sometimes goes by other names such as builder’s warranty insurance, builder’s risk insurance, builder’s indemnity insurance and statutory insurance.[br]

The purpose of this type of insurance is to protect homeowners from suffering financial losses that are caused by damage or defects when work is being done on the home. The warranty insurance also protects the homeowner from work that ends up being incomplete.

A building can be put at risk when construction is going on for any number of reasons. A fire can break out, lightning can strike the building, heavy rains can cause damage and the same can be said for high winds. The general contractor is responsible for any losses that he is negligent for, however the property owner is responsible for the majority of losses caused by such things as weather damage. This is why builder insurance is so incredibly important to purchase before a construction or renovation project gets underway. Possessing this risk insurance indemnifies the homeowner against many of these losses.

As previously mentioned, this type of insurance generally covers losses that occur due to fire, wind, rain, snow, lightning and often times vandalism as well. However there are many things it does not cover. It rarely covers such things as floods, earthquakes, acts of war or any intentional damage done by the homeowner.  As well, the coverage only lasts for the length of time it takes for the construction to be completed. Once the work is finished and the home can once again be occupied, the builder insurance policy comes to an end.[br]

This kind of insurance is purchased by a property owner before work commences. In some cases a general contractor may buy the insurance coverage if it is a stipulation of the contract. If the project being done involves additions or renovations then it is possible that the property owner will already have a clause in their current property insurance that covers the new work that is about to get underway. This would then mean that there would be no need whatsoever to purchase builder insurance.

 Insurance policies do vary greatly so if this situation describes yours then check with your insurance provider to  find out if you need the risk insurance for the intended work or not. You do not want to buy what you don’t need but you do not want to assume anything either. It is always better to be safe than sorry.