Builders Risk Insurance Texas

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Texas Builders Risk Insurance Explained

Builders Risk Insurance TexasBuilders risk insurance is a special type of property insurance that indemnifies against damage to buildings while they are under construction. Builders risk insurance is coverage that protects a person’s or organization’s insurable interest in materials, fixtures and/or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from a covered cause.

Texas Builders Risk Insurance Explained

There are many types and many ways to
insure your investment property…

Builders Risk

  • 3, 6, and 12 month polices
  • Theft/Vandalism Coverage
  • Liability Coverage

Completed Operations

  • For Contractors & Manufacturers
  • Liability Coverage

Tenant Dwelling

  • Property Coverage
  • Liability Coverage
  • Contents Coverage (if needed)

Vacant Dwelling

  • Property Coverage
  • Liability Coverage

Builders Risk Insurance Texas

While it is standard practice for builders to purchase an insurance policy covering the physical structure just after the foundation has been poured and before construction begins, such policies provide coverage only during a minimal period. During this time, many potential hazards could affect your construction project and damage your property, including Acts of nature (e.g., earthquakes, hurricanes, tornadoes, etc.), accidents (e.g., collisions between trucks delivering building materials), fires, and other forms of theft or vandalism.

What is Texas Builders Risk Insurance?

A comprehensive commercial property insurance policy covers builders’ risk for a specific period during the construction process. The policy provides financial protection against damage that may occur during and after construction and against the theft and vandalism of materials and equipment used to construct a project.

The Texas Builder’s Risk Insurance policy is designed for professional builders, developers, contractors, and related industry professionals who need coverage only during the new construction process. In addition to damage from storms, accidents, fire, or other events, the policy also covers the theft or vandalism of building materials and tools used in construction.

Coverage Highlights: Property Damage caused by construction-related activities, Theft of materials and equipment used during Construction, Workers Compensation for employees working on your site.

Who needs Texas Builders Risk Insurance?

Every company that owns the property under construction (such as contractors, subcontractors, suppliers of building materials, etc.) should consider the Texas Builders Risk Insurance policy.

How is this different from General Liability Insurance?

A general liability insurance policy is designed to protect against “bodily injury” and property damage (including loss of use) on your premises or another party’s premises. A typical general liability policy excludes coverage for damage to your property. At the same time, it is being built or repaired, theft of materials and equipment used in the construction, workers compensation on-site injuries caused by third parties during construction, lawsuits arising from faulty construction, or injury/damage on-site.

What are the typical limits of Texas Builder’s Risk Insurance?

The limits will vary depending on the classification of your business and the specific products chosen. However, most materials distributors primarily cover up to $100,000.00 of property damage per occurrence for fire and lightning and a blanket limit of 10% of their overall policy for “Other” property damage, including windstorm, hail, explosion, riot, aircraft, or vehicles.

What is Builders’ Risk?

Builders’ risk insurance covers the new construction process for damage to the building materials and equipment used in construction. Often referred to as “builders risk coverage,” it can be either a part of an overall insurance policy or it may be written as a separate policy. More frequently, it is sold as a part of a policy that includes Property Insurance coverage for the completed new construction project.

Builders’ risk insurance policies are generally written for a short period. Typically, builders’ risk coverage begins on the date the foundation has been poured and ends when local authorities issue the final certificate of occupancy. Although the exact terms may vary from one insurance company to another, most policies cover 40 – 90 days. In addition, most builders’ risk insurance policies contain an optional extension called the “Anchorage Period.”

During the Anchorage Period (APD), if requested in writing by the insured and accepted by the insurer before the expiration of the builder’s risk coverage, coverage for a maximum of 10 additional days will be provided.

Even if the construction project is not complete or occupied by a tenant at the end of the policy period, it would still be considered “in process” and therefore eligible to receive claims-made insurance protection. This form of coverage begins immediately upon purchase and continues indefinitely.

The insured may elect to make the following coverages available under claims-made coverage:

Completed Operations Coverage: This option allows retention of existing insurance protection for future business operations, should they begin after the builder’s risk coverage period expires. The start date for this policy period is not tied to when the construction project was completed.

– This option allows retention of existing insurance protection for future business operations, should they begin after the expiration of the builder’s risk coverage period. The start date for this policy period is not tied to when the construction project was completed.

Occurrence: This option maintains existing claims-made coverage that includes property damage to the building and any other covered spaces, such as sidewalks or parking lots. Optional coverages that are typically included in the builder’s risk coverage may be extended for this policy period

– This option maintains claims-made coverage that includes property damage to the building and any other covered spaces, such as sidewalks or parking lots. Optional coverages that are typically included in the builder’s risk coverage may be extended for this policy period

Completed Operations & Occurrence: This option provides claims-made protection that includes completed operations and occurrence coverages. As with occurrence coverage, all optional covers supplied in a standard builders risk insurance policy will extend to policies written during this period.

As mentioned before, the premiums for both of these policy options will increase as time goes on. The additional premiums simply reflect the increased risk during this extended period.

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