Construction projects are complex. Between managing deadlines, materials, and teams, there’s always room for the unexpected to occur. That’s where builders risk insurance becomes indispensable. It’s a specialized policy designed to protect construction projects from a variety of risks, ensuring that unexpected incidents don’t derail your work or increase costs.
If you’re new to builders risk insurance or simply want to ensure you’re fully covered, here are 7 common claims that builders risk insurance typically covers.
1. Theft of Materials
Construction sites, unfortunately, can be prime targets for theft. Expensive materials like lumber, copper wiring, or equipment are valuable and often go missing. Builders risk insurance covers stolen materials as long as they’re part of the insured property. Keep in mind that proper site security measures may also be required to maintain coverage.
Example Scenario
A contractor arrives at the construction site to find all their newly delivered high-end roofing materials have been stolen overnight. Builders risk insurance steps in to reimburse the value of those materials.
2. Damage from Weather Events
Mother Nature can be unpredictable, and weather incidents like storms, hail, or strong winds often cause damage to sites. Builders risk insurance typically covers damage to the structure in progress as well as on-site materials impacted by weather events.
Example Scenario
A heavy storm blows through mid-construction, tearing off a partially installed roof and damaging siding materials. Builders risk insurance compensates for the repair and replacement costs.
3. Fire Damage
Fires, though rare, can devastate construction sites. Builders risk insurance covers damages caused by fire, whether from lightning, machinery malfunction, or accidental ignition. It’s one of the foundational risks most policies are built to address.
Example Scenario
An electrical short circuit from temporary wiring sparks a fire on-site, destroying a portion of the half-built structure. The insurance policy covers the cost of rebuilding that section.
4. Vandalism
Construction sites can attract vandalism, sometimes leading to property damage or delays. Acts of vandalism, whether graffiti, broken windows, or damage to materials, are often covered under a builders risk insurance policy.
Example Scenario
Overnight, vandals break into a site and spray graffiti on newly installed walls, requiring extensive repainting. Builders risk insurance reimburses the cost to repair the damage.
5. Equipment Breakdown
When vital equipment breaks down, it can bring your entire project to a halt. Builders risk insurance often includes coverage for equipment, protecting you from losses due to mechanical issues or accidents during use.
Example Scenario
A contractor’s crane breaks down while moving materials, halting progress on the build and requiring costly repairs. The policy helps cover repair expenses and potentially lost time.
6. Explosion-Related Damages
Explosions caused by gas leaks, equipment malfunctions, or other unforeseen circumstances can result in significant damage to construction sites. Builders risk insurance will cover the building materials and progress lost due to an explosion.
Example Scenario
During the installation of a gas line, an accident causes a small explosion that damages parts of the under-construction infrastructure. Builders risk insurance backs the costs of repairing the damage.
7. Water Damage
Water damage is another common peril for construction sites, whether from burst pipes, accidental flooding, or heavy rain that penetrates an unfinished structure. Builders risk insurance steps in to mitigate repair costs.
Example Scenario
A plumbing issue during construction causes water to seep into the walls and flooring, requiring immediate remediation. Builders risk insurance covers the cost of repairs.
Final Thoughts
Builders risk insurance is a critical safety net for construction projects, covering a wide range of unexpected incidents that could otherwise derail progress and eat into your budget. From theft and vandalism to weather damage and fires, this policy ensures you have the financial protection needed to keep your project on track.