Anyone that performs construction work must ensure that the work gets done. However, contractors cannot prevent all hazards that might threaten the project. Should an accident occur, then setbacks might prove costly. To help mitigate the cost risks, contractors of any size need builders risk insurance. This is coverage that will apply to your work in progress. However, it will last only for a certain time. You’ll need to examine your policy to understand its coverage period.

What does builders risk insurance do?

Builders risk insurance covers properties under construction. It will help contractors recoup their losses if something unexpected damages or interrupts their work. It might pay for:

• Cleanup and rebuilding of the damaged structure
• Replacement of damaged materials
• Excess costs resulting from the delay in work

One instance where coverage might help is if severe weather sweeps through a community and damages a building under construction. Builders risk coverage can help the contractor cover the recovery costs. The project will be able to get back on track without suffering a massive financial setback.

The Duration of Builders Risk Insurance

Builders risk insurance only covers a work in progress. Therefore, this is temporary protection. You’ll want a policy that adequately applies to a construction project from start to finish. Carrying coverage for too long might expose you to costs that you don’t anticipate.

When setting up your coverage, you will usually have to choose the term that you want the policy to last. This should allow you to have coverage while you need it, and you can then discard it when the project completes.

• Generally, your policy will start on the date that you have signed all contracts to complete the work. This might be a different date from the day you start the actual construction. This allows a bit more of a cushion of protection.
• Some policies specify more specific times when coverage (either in-part or in-full) will become active. Check your policy for any of these additional dates.
• Many builders’ risk policies terminate automatically. However, when they stop might differ. Some end on specific dates. Others are more flexible and might last until you complete the work or hand over the keys to the new owner.

Depending on the way your policy terminates, you might or might not have to notify your insurer that you have completed the work. However, because your policy will end at some point, you will want to make sure you have full property insurance from that point onward. Your insurance provider can work with you to make sure your policy lasts for as long as necessary. Then, they will help you transition it to standard property coverage, if necessary.