In North Carolina, new construction is exposed to more risks than in other parts of the country. The hurricanes that batter the coast are just one example of a structure’s many challenges before it is constructed. For this reason (among many others), construction teams are wise to carry builder’s risk insurance.
This type of protection offers comprehensive coverage for a wide range of potential hazards that could befall a work site. Not every type of peril is covered, and understanding the difference between standard inclusions and what’s not covered is the first step in choosing the best policy for your situation.
Here is an explanation of the types of property damage covered by most North Carolina builder’s risk insurance, what is commonly excluded, and how these events can occur.
Property Damage Insurance for Fire Damage
One of the most common risks that new construction faces is fire. A fire at a construction site can be caused by anything from a nearby lightning strike to an incorrectly doused cigarette. However, fires usually start due to sparks from construction equipment (such as metal saws) or faulty electrical.
If a fire destroys some of the new builds, the cost to replace materials or start over is on the construction team if they do not carry builders’ risk insurance. This type of protection can also pay for soft costs, such as the new homeowners renting a place due to a delay in their move-in timeline.
Property Damage Insurance for Vandalism
A construction team can keep tight control over the training and behavior of their crew, but they cannot control what strangers do. Should new construction be struck with vandalism, such as graffiti, can the builder’s risk insurance pay for covering the mark or replacing the affected material? Some insurance policies will request proof that the work site is adequately secured to cover vandalism comprehensively.
Property Damage Insurance for Theft
Like vandalism, theft can occur at a new construction site at the hands of a third party. Materials relevant to the construction, such as wood or fixtures, may be taken alongside contractor tools. While a tools & equipment policy can protect against some of this risk, a builder’s risk insurance is an additional layer of security for things that other riders or policies may not cover.
Property Damage Insurance for Natural Disasters
Thanks to its location near the coast, North Carolina is exposed to its fair share of severe weather. The natural disaster coverage within a builder’s risk insurance can secure a construction project while it is most vulnerable to hurricanes, wind storms, hail, and more. Some policies require the peril explicitly named, while others are more flexible. Be aware. However, flooding is less commonly included and may need its policy for complete protection.
Property Damage Insurance for Pollution Risk
Building a structure often requires using artificial materials, which can leach into the environment. If the land or nearby area is damaged due to debris or pollutants during construction, some builder’s risk insurance policies will cover the cost of remediation or cleanup.
Property Damage Insurance for Sewer Backup Risk
Any new structure will need to be connected to the city’s sewer system, and problems with clogs, tree roots, or other issues can result in a backup of contaminated water into the work site. The builder’s risk insurance can fund material replacements and cleanup if a drain or sewer backs up during construction.
Types of Property Damage Excluded
Many types of property damage can impact a home or business while still under construction because it does not yet contain the protections afforded by secure walls, roofs, and safety systems. However, while builder’s risk insurance is broad in its coverage, not all hazards and perils are included. Some of the most frequent exclusions that require an additional policy or rider include:
- Theft by employees
- Acts of war
- Faulty design
- Poor workmanship
- Poor material quality
- Business interruption
- Loss of market value
- Settling and shrinkage
The types of inclusions and exclusions will be specific to the policy you are considering. Read all the contractual details and work with an industry professional to craft protections that suit your needs.
Get Builders Risk Insurance Before Your Next Project Starts
Without their protective features, buildings under construction are especially vulnerable. However, contractors with a builders risk insurance policy can confidently approach their jobs, knowing they are protected from the most significant risks at their job site.
The experts at Burton & Company can help you create a comprehensive builders risk policy that includes the most problematic hazards for your situation. Contact Burton & Company to schedule an appointment.