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Builder’s risk insurance: What you should know

The number of risks in the Florida construction industry demand various types of insurance policies to mitigate them. According to the American Bar Association, most commercial construction projects warrant builder’s risk insurance. It is also known as course of construction insurance because it provides coverage on the property during the project, including the building being constructed or renovated, materials and temporary structures. As the name implies, coverage extends from inception of the policy through the course of the work and up to its completion.

Named peril policies generally cover very specific risks, and there are several basic loss causes listed in a standard form of this type of policy. These typically include the following:

  •          Fire, lightning, smoke and explosions
  •          Windstorms or hail
  •          Vandalism, riots or civil commotions
  •          Volcanic action
  •          Sinkhole collapse
  •          Sprinkler leakage

Coverage often also covers damage from aircraft or vehicles, and some policies also include damage from the weight of snow, ice or sleet, from water and from falling objects.

Even in an all-risk policy, which is not limited to a set list of risks, Citizens General Insurance Brokers points out that there are usually a number of exclusions, and these should be reviewed carefully. Frequently, some natural disasters are excluded, as are damages caused by acts of war or terror. If an employee steals materials or other items from the project site, these are usually not covered, and neither are vehicles, tools or equipment on the property. Other types of insurance are often available to cover the exclusions in a course of construction policy.

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