Construction projects are continually at risk of potential delays. Most contractors know to build allowances for minor delays into their schedules, but more major ones can cause bigger problems. Builders risk insurance may help protect Massachusetts contractors against the financial ramifications of a major delay in construction.
Builders risk insurance is coverage for in-progress construction projects. Policies usually insure against the financial liability that can come with not completing a project on time, or at all.
Builders risk coverage is primarily for larger construction projects. Most Massachusetts contractors that take on major commercial or government projects should consider builders risk. In many cases, commercial or government customers may require it.
Not carrying builders risk can leave these contractors exposed to devastating financial liability if they don’t complete work, either on time or at all. A customer could hold the contractor liable for any financial costs associated with not completing work. Those costs can be quite high when it’s a large-scale commercial project that’s in question.
In addition to protecting against construction delays, builders risk might also cover items that a contractor keeps at the construction site. Depending on a policy’s terms, it could cover things like:
Policies can especially vary in whether they cover structures that are being worked on, and which ones they cover if they do offer this protection. Protections for in-progress structures and for completed structures can be different even within the same policy. An insurance agent who specializes in builders risk will be able to check what protections a specific policy has for structures.
The other items listed are normally only covered by builders risk when they’re at the worksite. Inland marine insurance, commercial property insurance, or another insurance may be needed to insure equipment, tools, and materials elsewhere.
Builders risk is usually purchased for larger construction projects, such as commercial buildings, housing developments, retail centers, industrial facilities, and public infrastructure. It might also be procured for major renovations of commercial buildings, or (less often) extensive landscaping around them.
Builders risk may be obtained for a new subdevelopment, but it’s usually not purchased if building just one house. If coverage is really needed for the construction of one house, an agent who knows builders risk well can check what options are available.
Builders risk policies may cover a range of perils. Depending on a policy’s terms and conditions, events including the following might be included in coverage:
Many builders risk policies offer an option to extend coverage if the insured project exceeds the initial timeline. It’s common for policies to offer just one extension, however, after which a new policy is typically needed if delays continue.
Contractors should carefully review all of a policy’s terms, but especially any pertaining to extensions, with a knowledgeable insurance agent.
Insurance companies look at numerous factors when calculating the premiums for a builders risk policy. A few of the details they usually consider are:
The easiest way to find out how much a particular project will cost to insure is by working with an independent agent. An independent agent has freedom to request quotes from several different insurance companies.
If you need builders risk insurance for a construction project that’s in Massachusetts, reach out to the independent insurance agents at Paul T. Murphy Insurance. We’ll help you find the right policy for the construction work that you’re doing.
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This material is for informational purposes only. All statements herein are subject to the provisions, exclusions and conditions of the applicable policy, state and federal laws. For an actual description of coverage, terms and conditions, please refer to the applicable insurance policy or check with your insurance professional. The illustrations, instructions and principles contained in the material are general in scope and, to the best of our knowledge, current at the time of publication.
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