Home builders risk insurance can be quite helpful. If you're a contractor or a builder, you would know its importance. However, similar to other types of insurance, it comes at a cost. And sometimes the high price is what prevents builders from buying this insurance.
Is it the right thing to do? Nope. What if something bad happens and there is no home builders risk insurance? Well, you'll end up paying everything from your pocket. Does it feel good? Obviously, no. However, there's a way you can save some of your home builders risk insurance without losing coverage.
Do you want to know how? Well, read along.
What is Home Builders Risk Insurance?
It's a type of insurance that offers coverage for damage to property which a builder is constructing or renovating. Usually, a party purchases this insurance before or on the date of beginning the building project.
It's temporary coverage which is available for 6-, 9- and 12-month periods. If your present insurance doesn't cover renovation or new constructions, its time to get a home builders risk insurance.
Who is it for?
Primarily, home builders risk insurance is meant for: -
● Property owners
● Financial institutions
● Contractors, or development/investment companies
● Determine your Risks
You can cover more parties by mentioning an additional coverage clause. However, it'll cost more than usual.
7 Tips to save on home builders risk insurance
1. Look for the Risks involved
Its vital that you perform the 2-step check. It may sound cliché but its important. Many contractors end up buying coverage which they don't require. And in such cases, they end up spending way more than they required.
Here are the two steps you need to check: -
● Check the protection your project needs.
● Check what does the policy offer.
Why is it important to check the risks?
Different building businesses have different requirements. Let's say your competitor is evolving slower than you. It somehow changes the way you work and the protection you need as compared to the competitor. Risks involved in your business and a year ago may be different from today.
It's the reason why you should first look for the risks involved. Once you've assessed the risks, check for what the policy offers, only then proceed further. It'll help you buy coverage for only what you need. And thus, you'll save money in the end.
2. Put in Some Research
It is quite helpful if you put in some research. You can find numerous companies that operate online and offline. If it's convenient, you can visit physically. Or you can check online. It'll help you compare and find the best possible quote.
However, researching is a time-intensive job. If you have ample time, you can go on with researching. Otherwise, you can find good insurance products
from company like traderisk.
3. What is covered under the builder's risk cover?
It's a point we would like to stress. The purpose of a builder's risk insurance is to protect equipment and other tools from damage, theft, or physical loss. Builder's risk insurance covers equipment or materials used in the project from: -
● Vandalism vehicles
So, check with the company what cover it provides. If that's what you need, go for it.
4. What is not covered under the builder's risk cover?
Sometimes the contractors or builders assume the coverage. And this is not a good practice. You should know exactly what's covered and what's not. So, here is when you won't get coverage: -
● Damage due to Faulty design
● Damage due to Planning
● Damage due to Workmanship
● Damage due to Materials
All in all, you won't get liability coverage with Builder's Risk insurance.
5. Go for a Higher Deductible
How high the premium will be, depend on different insurance providers. However, if the premium is too high, it can be hard for you. Its because there are hundreds of other expenses involved in a construction project
. And if you put a high premium on top of it, it can become cumbersome.
You can ask your insurance provider to reduce the premium and increase the deductible. This can be quite easy for you to manage.
6. Check what you can spare beforehand.
In most cases, the builder's risk insurance will cost you between 1-5% of the allotted budget. However, this can vary largely according to what your needs are. You can analyze the entire project and make sure the following things are covered:
● Construction materials
● HVAC equipment
Once the important items are covered, you can ask for a quote and a premium. If the premium is under the amount what you can spare, it is good. Otherwise, you can reduce the materials that need coverage. Keep in mind to reduce only the unnecessary materials.
7. Start the project on time.
You must start the project as soon as you purchase the insurance. Or you should buy the insurance on the day you're beginning the project. If you purchase the insurance after the project has started, the percentage of completion will be noted. And sometimes, it becomes hard to get a home builder's risk insurance.
The home builder's risk insurance is time-bound. So, if you start your project late, you may end up paying an extra premium. So, start your project on time. Also, make sure to buy insurance for the duration you think the project will run.
A home builder's risk insurance is quite essential. Whatever the case, you must not ignore the insurance. It can offer priceless coverage in some conditions. And If you follow the above tips, you can save good money on it. So, go through the tips and save some money.