Builders Risk Insurance for Homeowners: Why a Permanent Property Policy is not Enough for Home Building and Remodeling

When homeowners remodel or build additions for their homes, they often believe their homeinsurance policy will cover the project. Sometimes, contractors have the same misconception by overestimating the coverage offered by the homeowners existing policy. 

In reality, homeowners insurance does not provide comprehensive coverage for many types of exposures that come with residential renovation or remodeling projects.

Why Builders Risk Insurance? 

Builders risk coverage is intended to insure a structure while it is under construction. Whether the project be new construction or remodeling, it protects insurable interests in materials, fixtures and/or equipment to be installed.

Builders risk policies offer several benefits, including higher coverage limits than those available through homeowners' policies. It also allows the policyholder to extend the policy term if needed.

How Builders Risk Benefits Homeowners 

One major benefit of builders risk insurance for home renovations is that the coverage is broad. This means the policy offers coverage for the remodeling project only or inclusion of the existing structure. The types of covered perils and losses are also much more extensive than those included in typical homeowners' policies.

For example, builders risk policies cover:

• Theft of building materials
• Property in transit or at a temporary storage location 
• Damage caused by fire or lightning, wind or hail, vandalism or arson 
• Scaffolding
• Debris removal
• Fire department service charges
• And more! 

A builders risk insurance policy can even provide up to $25,000 of reward money for intentional damages caused by theft or arson.

Clients can choose to purchase coverage for contract change orders, which is a common occurrence during remodeling. If a homeowner chooses to upgrade materials mid-project and delay reporting to the provider, the upgrades will be covered should a loss occur. 

An additional consideration for your clients is that purchasing builders risk insurance can help to minimize the need to report claims to the homeowners policy insurance provider. This ultimately helps the homeowner by keeping their permanant policy costs lower.

To learn more about the many benefits of using builders risk insurance and ensure your client has the best coverage for their construction project, check out our Builders Risk Insurance Checklist.

This is intended as a general description of certain types of insurance and services available to qualified customers. Your policy is the contract that specifically and fully describes your coverage. The description of the policy provisions gives a broad overview of coverages and does not revise or amend the policy.

Home renovation? Compare homeowners policies to builders risk.

Homeowners policies typically don’t cover the scope of exposures insured by residential builders risk. Those gaps can lead to financial implications should a loss occur. Read this guide to help you identify core differences between homeowners and builders risk insurance, and learn considerations for selecting the best option to protect your clients’ interests.

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