Whether you are building a new home or undergoing renovations on your current home, it is an exciting, hectic time that comes with lots of stress. Between budgeting, figuring out timelines, coordinating with contractors and balancing your everyday life, insurance is a piece of the puzzle that is often overlooked amidst the chaos.
A construction site carries a number of risks for the property owner, with contractors and sub-contractors coming in and out, heavy and dangerous equipment lying around as well as unsecured structures and property. There is lots of potential for accidents and property damage to occur. Many homeowners will rely on the contractor’s insurance or simply assume their regular home insurance policy will include coverage for renovations. With the investment you’re making into a home, it’s important to make sure you are adequately protected in the event something goes wrong.
Your home insurance policy does not contemplate a number of the risks associated with building and renovation. A builders risk Insurance policy, on the other hand, is specifically designed for property while it is under construction.
Builders risk insurance serves as protection for both property owners and contractors. Although this can be purchased by either party, your contract should stipulate who is responsible for purchasing the insurance. It is recommended that you purchase this insurance in your name so that, in the event of a claim, you have full control on the decision-making process. If you agree that the contractor is responsible, it is best that you obtain a copy of the policy and have it reviewed for the appropriate coverage and limits. You may find that the contractor’s policy is not sufficient and that you may need to purchase your own. Either way you should have your name added as an additional insured to the contractors liability policy for the project.
Simple tips to avoid construction-related losses
If you are planning to build a new home or renovate your current residence, follow these practical tips to help avoid losses during construction:
- Keep a sufficient number of portable fire extinguishers distributed throughout the worksite. Homes under construction are particularly vulnerable to fire. Having several extinguishers (multi-purpose Type ABC, at least 10 lbs.) accessible on each level and well-marked can help prevent a small fire from causing major damage.
- If you are renovating your home, never disconnect your fire or burglar alarms. When sanding floors or performing plaster work, a lot of dust may trigger alarm components. Instead of turning off smoke detectors, cover them with plastic bags or manufactured tops that can be removed at night, when fires tend to occur.
- For new builds, plan ahead for fire and burglar alarm installation. Consider installing a temporary centrally monitored system as soon as the house is enclosed. With just a phone line and temporary power, this system provides automatic notification to authorities in case of fire or break-in after workers have left.
- Consider installing a residential sprinkler system early in the construction process. Sprinklers are an affordable way to protect against major fires and may save you money through premium reduction credits over time.
- Take steps to keep unwanted visitors away from the construction site. Vacant sites can attract theft and vandalism. Use motion-activated lighting, perimeter fencing, gates or chains across driveways, and even security guards for protection while your home is vacant.
- Require proper storage and disposal of flammable materials. Many construction materials are highly combustible. Ensure that scrap lumber, sawdust, cardboard containers, and other debris are removed daily. Painters should remove rags and solvents at the end of each day, as they can ignite if left unattended. Insist on a strict no smoking policy.
- Confirm your contractor is adequately insured. When selecting a contractor, request a copy of their “certificate of liability” to verify insurance limits. The liability limit for any single occurrence should equal the total insured value of your project.
If you are planning to undergo construction on your property, ensure you have what you need before the project begins. Our experienced brokers are ready to offer personalized advice and ensure you have the right coverage.
Connect with us today and enjoy peace of mind throughout your build or renovation.