Builder’s Risk Insurance
We have heard a lot of insurance. From insured buttocks to insured smiles, anything can be insured. Now we ask, how about those in risking their everyday lives? Can they be insured as well? Axis Capital, a group of insurance and reinsurance company based in Bahamas with branches in Singapore, Australia, UK and America has defined this kind of insurance for you to review.
What it is?
Builder's risk insurance is a special type of property insurance which indemnifies against damage to buildings while they are under construction. Builder's risk insurance is coverage that protects a person's or organizations insurable interest in materials, fixtures and/or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from a covered cause.
Why is it Necessary
We cannot deny the risks that are incorporated in building constructions. Anything can happen.
It may catch fire, be damaged by high winds, or fall victim to other unforeseen circumstances. A principle of common law is that any new construction or other improvement to land becomes property of the owner of the land - the title holder - once there has been an "improvement" to the owner's site. Builder's risk insurance indemnifies against some of these losses.
What does it cover?
Depending on the terms on the contract and policy of your insurance company, builder's risk covers perils such as fire, wind, theft and vandalism and many more. It typically does not cover perils such as earthquake, flood or wind in beach zones unless the policy has been specifically endorsed to do so. However, earthquake riders can be very economical, depending on where your project is located and should be considered. If the government has already raised a warning that the location of your building is prone to natural disasters, it may greatly affect your premiums and legibility.
Who buys builder's risk insurance?
Coverage should be purchased by the custom builder or general contractor and may also be purchased by the property owner. Builder's risk coverage may be necessary to show proof of insurance to comply with local city, county and state building codes and is often required as a condition to many contracts.
The builder's risk insurance policy will pay for damages up to the coverage limit. The limit must accurately reflect the total completed value of the structure. The construction budget is the best source for determining the appropriate limit of insurance. Builder’s Risk insurance policies can often be written in terms of three-months, six-months, or 12-months. If the project is not completed by the end of the initial policy term, it can often be extended, but usually only one time. Developing cities like Kuala Lumpur, Malaysia, Vietnam, Beijing China and Jakarta, Indonesia are yet to expand their Builder’s Risk Insurance as they have the highest records of construction-related accidents in 2014.