Builders Risk Policy Cost
What does builders risk insurance cost?
One of the most frequently asked questions construction clients have about builders risk insurance is how much it costs. Unfortunately, it is nearly impossible to answer that question without understanding some key details about the risk.
Builders risk coverage can be more affordable than some clients realize. That’s because the risk assumed by the insurance company is often low in the early stages of the construction project. Exposure rises over time as the structure reaches various stages of completion, but costs are amortized over the entire policy term.
When evaluating providers, it is important to understand what exposures drive the price of premium. In general, the cost of builders risk insurance will depend on five key considerations: location, construction type, project type, optional coverage, and additional fees and taxes.
The geographic location of a course of construction project is the biggest factor when determining the cost of a builders risk policy. Coastal areas are typically more expensive than inland regions, and policy costs go up in areas prone to certain natural disasters, such as wildfires, hailstorms and tornadoes.
Is it an installation, remodel or new construction project? The cost of covering an installation job is often lower than other policies, especially since these projects are usually shorter and less involved. Remodeling projects are typically the costliest since insuring an existing structure comes with significant risk once alterations are made. Of course, basic remodels cost less than major remodels that involve structural changes.
Higher quality construction means a more durable structure. Projects constructed with fire-resistive material are likely to be more favorably rated than a wood-frame structure, which can easily result in a total loss in the event of a fire.
Of course, the type and value of optional coverage the client chooses influences the insurance premium. These optional coverages may include flood damage, earthquakes, change orders and more.
Additional Fees and Taxes
Unlike admitted carriers that are regulated under state law and contribute to their state’s Guaranty Fund, non-admitted carriers may add charges, such as policy fees and surplus lines taxes. Admitted carriers cannot include these fees when determining policy premiums. The Builders Risk Plan is insured by Zurich, an “A” rated global insurance provider.