When you plan to build or renovate your home, there is a lot to think about – choosing the right contractor, selecting the perfect materials, and trying to stay within budget. What about protecting your investment? This one crucial factor is often overlooked during the construction process. That is where Builder’s Risk Insurance, also known as Course of Construction, comes in. This specialized type of property insurance is designed to protect homes under construction or renovation from various risks that could lead to costly setbacks. Here’s why homeowners, like yourself, need a Builder’s Risk policy before starting a major construction project. 

Protect Your Property 

Construction sites are vulnerable to a variety of risks. Builder’s Risk Insurance provides coverage for damage to the property caused by: 

• Fire and Explosions
• Theft and Vandalism
• Severe weather events (hail, wind,  lightning, etc.) 

Without Builder’s Risk Insurance, homeowners would have to cover the cost of repairing or replacing damaged property out of pocket, which could amount to a significant monetary loss. 

Cover the Construction Materials and Equipment 

Construction materials and equipment are at risk whether they are stored on–site or in transit. Builder’s Risk Insurance can help cover the replacement costs if the materials are stolen or damaged on site or during transportation. This protection is particularly valuable as inflation can impact the cost of materials and supply chain issues add to construction challenges.  

Delays and Extra Costs Happen 

No one wants an unexpected delay on their project, but they can happen. Delays due to property damage can lead to increased expenses, including additional labor costs, rental fees, and even increased loan interest payments. Builder’s Risk Insurance often includes coverage for “soft” costs (ex. construction materials) related to these types of delays, helping to keep the project on track financially. 

Mind the Gap 

A standard homeowner’s policy typically does not cover homes under construction or major renovations. If a fire, storm, or theft occurs during the building phase, you might not be covered. This coverage gap is filled with Builder’s Risk Insurance ensuring that the structure, materials, and even the construction site itself are protected. 

Insure Your Financial Investment 

It should be no surprise that your home is a financial investment, and building a home or making significant renovations is a major financial commitment. Without the proper insurance that a Builder’s Risk policy provides, any major setback could put a homeowner’s financial future at risk. Keep the money that you want to invest in the project protected – even when the unexpected happens.  

Meet Your Requirements 

Some lenders may require Builder’s Risk Insurance as a condition of the loan, while some contractors may require this type of coverage as part of their contract. Having the right policy in place ensures that you meet these requirements and avoid any legal or financial conflicts that may arise.  

To safeguard your financial investment during the construction of your home and major renovations, you need Builder’s Risk Insurance. By providing comprehensive protection against damage, theft, and delays, this type of policy helps give you peace of mind throughout the construction process. While having an additional upfront cost is not ideal, the potential savings and protection from monetary loss make it a smart investment. Consult with your insurance agent to ensure you have the right Builder’s Risk policy in place before breaking ground, and a homeowner’s policy once construction is completed – because when it comes to protecting your home, it is always better to prepare for the unexpected than risk it.  

To learn more about Orchid’s Builder’s Risk product, visit www.orchidinsurance.com/products/personal-lines/builders-risk/.