There is no denying the fact that any construction zone is surrounded by risks. There are risks that can cause damage to property or injury to people and therefore it is important to have all safety precautions in place in any construction zone. The possibility of accidents still looms large even if safety precautions are taken. To protect you from claims and liabilities that might arise due to such accidents, it is a good option to have the necessary insurance in place. Construction insurance will help to protect the owner and the contractor from claims that might arise due to damage or theft at the construction site. People opt for home insurance once a home is constructed and ready to occupy. Similarly, a builder’s risk insurance will help to protect you from unforeseen damages that might occur during the construction of your home. By looking at the following link, http://en.wikipedia.org/wiki/Builder’s_risk_insurance, you will be able to understand builder’s risk insurance a lot better.
What is the function of construction insurance?
Construction insurance is purchased before the start of the construction process and will help to cover loss that might occur due to damages caused by high winds, fire or other natural elements. Some insurance companies will require you to provide them the home building contract that you have signed with the contractor for issuing the construction insurance.
What is the term for construction insurance policies?
A construction insurance policy or builder’s risk insurance policy is generally valid for one year. However, if the construction of the home is completed before one year, you can ask for a refund or can use the excess funds while taking the home insurance. If the construction of the home is not completed in one year, you will have to renew the policy for a further one-year period.
Are contractors liable for damage caused during construction?
There is a misconception that the contractor is responsible for any damage that is caused during construction of a home. This is true only of the damage has been caused due to negligence on part of the contractor or his workers. Damage that occurs due to reasons where the contractor is not at fault will have to borne by you. You can protect your investment by opting for a builder’s insurance policy.
Will the compensation be on implied value of the building?
It is important to note that construction insurance will not consider the implied value of the building. The money that has been spent on the project will only be considered and will be compensated, even if the building has higher perceived value.
My contractor says that damage caused by me will not be covered by insurance. Is it true?
Most construction insurance policies will not cover for damages that occur by people other than the contractor or his men. If you get excited and try to help your contractor by doing some of the work, ensure that you do not damage the materials. Any such damage will not be covered by the builder’s risk insurance policy.