Builder’s Risk—Insurance for New Builds and Renovations

In this tough real estate market, you’re excited that you found an older home to completely renovate before moving in. It’s going well—then you get the phone call. A fire burned the structure to the ground. Now what? Did you have the right insurance policy to cover your losses?

When you’re building a new home, or renovating an existing one, you need a specialized kind of insurance coverage. A standard homeowners policy (HO-3) will not cover homes while they’re being built, or in the case above, while they’re being renovated. You need a builder’s risk policy to protect your financial investment during the construction process.

What is builder’s risk insurance?

Builder’s risk insurance protects a home from property damage and loss while it’s being built. This can be new construction from the ground up, or coverage for a major renovation project. Builder’s risk is a valuable coverage for both property investors and private homeowners, and it can cover either residential or commercial properties.

Most builder’s risk policies cover damage to the building itself and/or the construction materials on site from perils such as:

·         Theft

·         Vandalism

·         Fire

·         Explosion

·         Lightning

·         Wind and hail

Builder’s risk policy premiums are calculated using several factors, including location of property, type of project, type of construction, and the estimated date of completion. The property will typically be insured based on the estimated cost to rebuild the completed home. An experienced insurance agent, like those at Lakewood Financial, can help you figure out the coverage limits and deductibles best for you.

Since there is always some uncertainty surrounding construction timelines, especially now with supply chain and labor shortages, builder’s risk policies offer flexible policy term lengths. Many builder’s risk policies are written for nine months to a year, and can be rewritten if construction is delayed. We also can write policies for as short a time as one month if the project is a short-term one.

Don’t forget liability coverage

A construction site can be a dangerous place. What about liability coverage? Builder’s risk policies do not provide liability coverage for claims that happen during the construction period—for example, if someone is injured while on the property. Be sure to ask your Lakewood Financial agent to explain your options for protecting your liability in this situation.

Choose Lakewood Financial for your builder’s risk needs

Lakewood Financial has years of experience working with individual homeowners as well as property investors in organizations like Sarasota REIA, SREIA (Suncoast Real Estate Investors Association), TBREIA (Tampa Bay Real Estate Investors Association) and GOREIA (Greater Orlando Real Estate Investors Association). If you would like more information about builder’s risk policies, or if you’d like a quote, please call us at 941-747-4600, or click here to contact us online. We understand the insurance needs of property investors as well as private individuals, and would love to help you with all your insurance needs.