Home building is a specialized niche of the construction industry that faces risks and challenges unique to the residential process. Home builders and construction company owners looking for insurance solutions that address the unique aspects of these construction projects—including those with special requirements or high value—should stay fully informed about the types of protection that will keep them and their businesses safe from financial catastrophe.
Home builder insurance is the backbone of most construction coverage. Still, it is far from the only smart choice. In addition to baseline coverage from home builder insurance, which can protect against many of the common risks to the property itself, construction teams should invest in insurance targeting the risks specific to their project.
Here is an overview of the specialized insurance solutions that home builders can benefit from and how they fit into a comprehensive solution.
Understanding Home Builder Insurance Basics
The backbone of most residential construction insurance coverages is home builder insurance. You may have heard of this protection under other names, such as builder’s risk insurance or course of construction insurance.
This type of coverage secures a residential property against damage throughout construction. In some cases, it can offer additional protections for essential elements such as equipment.
While each home builder insurance policy is unique, most will include protection for perils such as:
- Hail
- Wind
- Fire
- Explosions
- Vandalism
- Theft
- Lightning
Because a building is especially vulnerable while it is being constructed, these risks may be more salient during the project than they would be for a fully completed home. While builder’s risk insurance covers a broad potential range of risks, it should not be the only type of coverage that a construction team acquires.
Essential Extra Coverage for Home Builders
In addition to home builder insurance, construction crews should be protected by other industry-standard policies. Some extra coverages that many teams find useful include:
Professional Liability Insurance
Also known as errors & omissions (E&O) insurance, professional liability coverage can shield a construction team from the financial repercussions of accidents and mistakes. For instance, if they construct a building whose electrical components are not up to code, E&O insurance can cover the expenses of addressing the issue, from new materials to additional man-hours.
Pollution Insurance
Depending on the work required for the residential construction project, heavy machinery such as backhoes and levelers may be necessary on a job site. These elements, as well as many types of construction materials, can impact the environment—machines can leak oil, old asbestos may be agitated during renovation work, and more. Pollution insurance can cover the cost of remediation for spills and damage caused by construction.
Flood Insurance
In some areas, flooding of the worksite may be a concern, even though flood coverage is not typically included in an overarching builder’s risk policy. Teams may need to add flood insurance for more comprehensive protection if their baseline policy does not list flooding as one of the named perils. Check the flood tables with the county to see whether a specific property is at risk of flooding and would benefit from insurance.
Coverage for High-Value Items and Projects
While some home builder insurance policies include basic coverage for high-value items, it is still typically recommended that construction teams acquire a separate equipment insurance policy, including equipment breakdown insurance. This type of coverage addresses the potential financial implications of equipment breakdown, from a delay in the project timeline to the cost of repairing the machinery.
In addition, some of the most valuable types of equipment may not be included in a builder’s risk insurance policy. For instance, many coverages place upper limits on the types of machinery they will insure, either by weight or by value. A supplementary equipment insurance policy is a smart choice to protect the company’s most valuable items.
However, equipment insurance is not all-inclusive. If employees use tools outside of manufacturer instructions or intentionally sabotage equipment, insurance protection will not typically address the financial ramifications.
Elevate Your Protection with Burton & Company
Home builders face challenging scenarios that change with each residential structure they create. This constant shifting of risk and peril necessitates adaptable and highly customized insurance solutions. The experts at Burton & Company work closely with residential construction teams to identify the most salient risks for their projects and create a comprehensive insurance package that enables them to approach projects with confidence.
Contact Burton & Company for a tailored insurance consultation that understands and meets your needs, whether you are crafting a small home or a sprawling mansion.
