What is builders risk insurance?

Contractors take care to protect their equipment and tools against damage and loss. Texas contractors also should take care to protect their projects against damage. That’s where builders risk insurance comes in.

Major construction projects can sustain major damage. Builders risk insurance can help cover the hard and soft costs associated with covered damage to a construction site.

What Texas contractors should have builders risk coverage?

Builders risk normally protects large construction projects that developers, commercial contractors, and specialized contractors work on. Texas businesses that work on major projects may need the coverage.

Smaller construction businesses are more likely to shoulder the risk of project damage themselves, and less frequently purchase builders risk coverage. For instance, residential remodelers that work on one property at a time typically forgo builders risk. It might not even be available to these smaller businesses.

Businesses that are unsure whether they ought to purchase builders risk coverage should speak with an insurance agent who knows this insurance well. A specialized agent will have the expertise necessary to help determine whether builders risk is appropriate for a given project.

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Is builders risk coverage available to new home builders?

New home builders can frequently purchase builders risk coverage for their projects, and often should do so. The coverage is generally available to new home builders because they work on sizeable projects that span several buildings, rather than a single kitchen or bath remodel.

What equipment does builders risk coverage extend to?

Builders risk coverage may help protect almost anything that’s part of a construction site. Most policies will extend protection to:

  • Equipment
  • Supplies
  • Materials
  • In-progress structures

Policies usually cover these items when they’re at a construction site, and sometimes when they’re being moved to/from a site. Inland marine coverage could instead be needed to protect equipment and supplies as they’re moved.

What costs does builders risk coverage help pay?

In the event of covered damage, a builders risk policy might help with both hard and soft costs. 

Hard costs can include expenses such as repairing or replacing equipment, replacing materials and supplies, and rebuilding structures. Rebuilding costs can encompass the costs of both additional materials and additional labor. Scaffolding, construction forms and temporary structures that are built on-site could also be covered.

Soft costs can include lost sales, lost rental income, additional loan interest, additional real estate taxes, and similar expenses that project delays might cause.

Exactly what costs are covered is determined by a particular policy’s terms and conditions, and protections can vary.

Builders Risk Insurance Texas

What are basic form, broad form and special form builders risk policies?

Builders risk policies are commonly underwritten as either basic form, broad form or special form policies. The differences between these policies lie in what perils they typically protect against:

  • Basic form policies normally cover a limited list of perils (e.g. wind, lighting, fire, explosions, etc.)
  • Broad form policies normally cover a longer list of perils (e.g. non-flood water damage, falling objects, etc.)
  • Special form policies normally cover perils so long as they aren’t explicitly excluded within the policy

Special form policies tend to offer the most robust protection, although any single policy’s terms could increase or decrease what it covers.

How can contractors in Texas get builders risk insurance?

For assistance with purchasing builders risk insurance in Texas, contact the independent insurance agents at Wise Insurance Group. Our agents are knowledgeable about the various insurance policies that contractors and construction companies frequently purchase, including builders risk policies. We’ll help you find a builders risk policy that’s well-suited for your business’ needs.

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