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You know you need builder’s risk insurance for new construction projects. It protects both the contractor and the project owner from things like fire, hail, theft, and vandalism. That way the project can be completed according to the terms of your agreement.

However, you should also consider builder’s risk insurance for renovations.

Regular Property Insurance Probably Won’t Cover a Loss During a Remodel

Many homeowners mistakenly think that their regular policy will cover a loss when undergoing renovations. Even some contractors may mistakenly assume that their general liability policy will provide all of the coverage needed if there’s a loss. The fact is that these types of policies often have exclusions, either for losses to the existing structure or losses that relate to the renovation itself.

Builder’s risk insurance for renovations is specially designed to cover the gaps that are left behind with other policies. Because they are designed to fill in the holes of existing insurance policies, they are customized for every renovation project. That saves you money and brings peace of mind.

Builder’s Risk Policies Feature Higher Coverage Limits

The other thing you’ll want to consider in regards to builder’s risk insurance for renovations is the fact that these types of policies feature higher coverage limits.

For example, if an electrical fire damages the new structure, a builder’s risk policy would pay to repair and replace what was lost. If lightening caused the fire, a builder’s risk policy may be able to cover both the new and old structures when a contractor’s regular liability policy might not cover either.

Projects That Should Be Covered by a Builder’s Risk Policy

Many renovation projects can benefit from a builder’s risk policy, but that doesn’t mean every single renovation requires a specialized policy. You can save money by knowing which projects should be covered by builder’s risk insurance, and which shouldn’t.

If the renovation is being financed by a third party, they will likely require proof of a builder’s risk policy. This ensures that their investment is protected.

All major renovations should include a builder’s risk policy, especially if the renovation requires the family or business to relocate temporarily. A policy can cover losses due to lost sales, rental income, loan interest, real estate taxes, and more that result in a project delay.

If the project is small and the homeowner is still living on-site, it’s important to check the home insurance policy before purchasing a builder’s risk policy. Sometimes the general policy will cover small projects, like a new tub installation. By double checking, you can avoid getting a builder’s risk policy unless you really need it.

Talk to an Insurance Broker About Your Builder’s Risk Options

Although builder’s risk insurance for renovations can help ensure your project goes off without a hitch, it isn’t always the answer. A policy must be customized for your unique situation in order for it to provide you with the right coverage.

Speaking with an insurance broker is the best way to get the coverage you need for a residential or commercial renovation. Brokers have access to multiple policies from many different insurance providers, enabling you to find the right policy at the right price.

With more policy and provider options, you also have more ways to customize your policy to ensure it fills in the gaps left behind by your existing policies. An insurance broker will review your current policies and research which options and policy extensions will cover your project appropriately. They can ensure there is no overlap in your policies that would cause you to overpay for insurance you already have.

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