Builders Risk

Builder’s Risk coverage protects your interest in homes under construction. Coverage generally does not include flood or earthquake coverage.  It also does not typically include wind coverage in areas designated by the SC Wind and Hail Underwriting Association as “Beach.”  Coverage typically runs from the delivery of materials until the earliest of:

• your interest in the property ceases
• 90 days past the date the property is occupied (unless reported as a model home)
• the date you abandon the home without the intention of completion
• 12 months after coverage went into effect
• when permanent insurance applies
• property is accepted by owner

1. Home Builder should carry builder's risk insurance whenever possible

2. Should homeowner insist on carrying builder's risk:

• Home Builder should be listed as additional insured or loss payee
• Coverage should include theft of building materials
• Contract should stipulate a limitation on the insurer’s A.M. Best (financial) rating
• Contract should state what perils are to be insured against (fire, wind, flood, etc…)
• Contract should limit the amount of the deductible

3. Contract should state who is responsible for deductible on builders’ risk policy

4. You need to be sure of your carrier’s definition of when Builder’s Risk coverage begins and ends

5. If purchasing Builder’s Risk on a per job basis you should have a written policy addressing:

• your application process for each coverage required with an allowance for waiting periods (flood and wind)
• extensions of coverage in the event the job runs over the initial coverage period
• binding restrictions/limitations during Hurricane season

6. If purchasing Builder’s Risk on a reporting form you should have a written policy addressing:

• your application process for each coverage required with an allowance for waiting periods (flood and wind)
• maintenance of a copy of the report for the full term of the job
• re-reporting in the event the job runs over the initial coverage period
• binding restrictions/limitations during Hurricane season

7. You should provide written notification to Builders’ Risk carrier when home is completed and to be used for a model home

8. Builder’s risk that is converted to model home coverage does not automatically include contents of the model home