Builders Risk Insurance for Home Remodeling or Restoration

 



Your homeowners policy does not typically cover theft of building materials, supplies and property owned by subcontractors during your home remodel or renovation.  Builders risk insurance protects structures and it protects the insurable interest in materials, fixtures and/or equipment to be installed.

Builders risk insurance can be secured for anyone with an insurable interest in the project. Most builders risk polices are for "completed value," including the total of all costs associated with the building and designing of the covered property.  This includes labor, overhead, materials, and building profit (if applicable). 

Builders risk policies include optional "add-ons," such as trees, shrubs and plants, debris removal, fire department service charge, reward money for stolen property, contract penalties, and more.

Basic underwriting guidelines for most builders risk policies:

  • Policy needs to be purchased/written in the name of the owner or builder
  • Requires two years of project-related experience
  • Construction typically needs to be less than 30% complete -- otherwise, it is subject to underwriting approval.
  • The renovation limit (if existing structure coverage is needed) is 20% of existing structure value.
A homeowners policy has little to no tolerance for certain renovations.  Water damage may be excluded for maintenance, repairs or construction.  Coverage may be limited if the insurance company is not notified of the renovation. Loss prevention strategies must be put in place to prevent policy cancellation. If the home is vacant during the project, it may void your policy after a certain number of days of vacancy.  

Ineligible remodeling risks include: moving or lifting off foundation; fire damage that has penetrated the roof; structures on the historic register; and digging out a basement.

Consult with your insurance agent if you have plans for any kind of renovation project, to make sure you have the right type of coverage. Builders risk can be purchased for 6, 9 and 12-month terms, with the option for policy extensions.

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