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Contractors Insurance - Builders Risk, Why Buy It - How much insurance to buy? PDF Print E-mail
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Contractors Insurance - Builders Risk, Why Buy It
How much insurance to buy?
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How much insurance to buy?

The limit on the policy should be enough to completely restart the project from the beginning, total value, including permits, engineering fees, everything, plus an additional 10% for cleanup. If you are responsible you should also insure the value of the uninstalled materials on the job site. Yes, you need a separate limit for materials; they are not part of the building until they are installed. Materials can be damaged but more likely they will be stolen. You should also find out who is responsible for materials in transit to the job site. If you are, make sure your builders risk policy has a limit for "Property in Transit".

Remodelers: buy insurance on the entire building including the value of the addition. That way any damage to the original structure will be covered by your policy and does not need to be turned into the homeowner's policy. Don't forget the uninstalled materials, property in transit and 10% for clean up.

Do Not Rely On Your General Liability Policy: (It's Got Exclusions) In plain english It may not be Covered!

Million Dollar Tip Always have the subcontractor provide you with a certificate of insurance making you an additional insured on their liability policy. That way you will know if they let their policy cancel while on the job. With out the additional insured wording you might not find out until it is too late. After the loss you want your insurance company to have someone to recover from if they caused the loss. A high loss history will cost you money in the form of higher premiums you will have to pay your insurance company. You want to protect your business from financial loss. One way of doing this is to practice the time honored risk management technique "risk transfer" . In plain english you make someone else responsible for that risk or loss.

 
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