Builders Risk Insurance
Builders Risk Insurance Insight | Major Renovations May Null And Void Coverage If Not Disclosed
Whether a building is being constructed, renovated or repaired, it is important to ensure that appropriate property insurance is in place before work starts. Building construction insurance is specifically designed to cover property during the course of construction and is typically purchased by either the property owner or contractor.
Most commercial property policies will exclude or null and void coverage if major renovations or construction above a certain threshold is not fully/properly disclosed in advance. There are additional risks and responsibilities inherent in this type of work that your typical property policy is not designed or priced to cover.
[Did you know?] All parties that have property involved in a project should be named in the building construction insurance policy. This may include the owner, contractor, subcontractors, the financial institution funding the project and, in some cases, the architects and engineers as well.
From Start To Finish – Common Policy Restrictions
When purchasing construction insurance, one of the issues often overlooked is the policy period. Building policies provide coverage for property during the course of construction, renovation or repair. But at what point does construction renovation or repair actually begin?
- Typically, contracts require that building construction insurance be provided for the duration of the contract period.
- The lender may specify the inception date.
- Review the building construction policy provisions to determine if there are restrictions on when coverage begins.
Determining when coverage terminates can be equally problematic. Building construction policies can contain provisions that terminate coverage prior to policy expiration. These provisions typically state that the insurance will end at the earliest of one the following:
- The policy expires or is cancelled
- The property is accepted by the purchaser
- Your interest in the property ceases
Careful planning will lay a strong foundation for your organization’s construction, renovation or major building repair project.
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Our advocates can help ensure that your building and construction risks are covered before you start renovations, make major property repairs or break ground for a new building project.