Builders Risk Insurance Florida

Florida is a growing state with an explosion of new construction. This has many benefits for our beautiful state, but how does property insurance cover all of this new construction? Whether you are building a single-family home or a multimillion-ddollar commercial property, there is a construction risk policy to fit your needs.

What is Builders Risk Insurance?

Florida Builders Hazard Insurance is a policy designed specifically for new and existing buildings under construction or renovation projects. The policy can be purchased and owned by the general contractor or owner. Although policies may vary depending on coverage options, a comprehensive policy will cover all stages from inception through obtaining planning permission.

What does a builder’s risk policy cover?

What does construction risk insurance cover? The answer depends on the insurance company.

Generally, construction risk insurance covers materials, fixtures, and/or equipment installed during the construction or renovation of a building when those items are physically lost or damaged for covered reasons. Fire, wind, and theft can have devastating consequences, but the impact of underinsuring a construction project can be even more severe for everyone involved.

Not all construction site policies are the same. In fact, the types of insurance available on the market are not standardized and vary from insurance company to insurance company. For this reason, it is important to fully understand the coverage, and especially the exclusions, before your client purchases construction risk insurance.

• Theft
• Vandalism and arson
• Collapse
• Fire or lightning
• Property damage
• Materials in transit and at temporary locations
• Debris removal
• Ordinance or Law
• And more!

Who buys builders risk insurance?

Almost all clients with a financial interest in a completed construction project are entitled to purchase builder liability insurance. This means that individuals or businesses, including contractors, business owners, landlords, real estate investors, and financial institutions, can be good prospects for building liability insurance.

Florida builders risk insurance offers you the option of taking out an insurance policy in the name of the owner or builder (but not in the name of the mortgagee or bank). Contractors and other interested parties may also be protected by additional designated insurance provisions.

If your client chooses to add the builder or owner as an additional insured, be sure to include a clear waiver of subrogation in the construction contract or agreement. This protects the interests of other named insureds if property damage occurs during construction.

Residential Project

Builders general liability insurance for residential properties is essential, whether it is building insurance for a new one- to four-family home or the renovation of an existing structure. Eligible private customers may include:

• Homeowners
• House flippers and investors
• Landlords
• Real estate agents
• Residential contractors
• Subcontractors

Commercial Projects

Contractors and owners of commercial property with construction, renovation, or installation projects are also great candidates for builders risk insurance in Florida and may include:

• Commercial contractors
• Commercial property owners
• Municipalities (local governments, school districts)
• Real estate agents
• Retail tenan

What does Builders Risk Insurance Cost?

If you’re new to construction insurance, you may be wondering how much builder’s risk insurance costs. The good news is that builder’s risk insurance is typically less expensive than some customers think.

In fact, the risk that insurance companies will take on from the first phase in the course of a construction project is often very low. Exposure increases over time as the structure reaches different stages of completion, but the cost of builder’s risk insurance is amortized over the life of the policy.

Generally, the cost of builder’s risk insurance is calculated based on five main factors: project type, location, type of construction, optional coverages, and additional fees and taxes.

1) Project Type

Generally, construction projects in Florida are divided into the following categories:

New Building

renovation (with or without an existing structure)

Installation

The cost of providing installation is usually the cheapest, as these projects are usually shorter and less involved. In contrast, renovation projects in Florida are likely to have the highest risk costs for builders because existing structures pose significant risks, especially if the project involves structural changes.

2) Location

The location of your construction project is the most important factor in determining the cost of Florida builders risk insurance. Location aspects that can affect the cost of building risk insurance in Florida include:

Near the fire station

Near (or within) a flood plain

States affected by wildfires (most commonly California, Washington, and Oregon)

Coastal areas (generally more prone to hurricanes, heavy rains, and tornadoes)

Areas prone to wind or hail

States in Tornado Alley (including, but not limited to, Kansas, Oklahoma, Texas, Mississippi, and Alabama)

3) Structure Type

The building materials used in construction also affect the total construction budget. Better construction means longer-lasting structures and less risk. For example, a project built with fire-resistant materials may receive a higher rating than a wood-frame structure, which is vulnerable to total loss in the event of a fire.

4) Optional Insurance Coverage

The Assure Builders American Risk Plan covers a broad range of policies and is therefore considered covered unless a peril or risk is specifically excluded. However, the type and value of the optional coverage chosen by the client will affect the cost of a builder’s liability insurance policy. These optional coverages may include:

• Flood Disaster
• Earthquake
• Contract Change Order
• and more

Ultimately, the builder must decide what risks they are willing to insure against and what risks they want to include in their builder’s risk policy. Check with the insurance company you work with to find out what coverage options are included in the insurance company’s standard policy, up to the standard limit.

5) Additional Fees and Taxes

The type of carrier also factors into the cost of the builder’s liability insurance. Unlicensed carriers often add fees, such as policy fees and excess taxes, to the cost of builder’s risk insurance.

Licensed carriers are subject to state laws and pay into state surety funds. They cannot include these fees in their premium calculations. Florida builder’s risk insurance is a recognized “A” solution for personal and commercial customers.

Does a Builder’s Risk Insurance Cover Liability?

It is important to note that the manufacturer’s liability insurance does not cover civil liability. This is property insurance that focuses on the physical aspects of a construction project: the building, materials, and equipment being constructed. It does not provide protection against legal liability arising from accidents or damages caused by the contractor or other parties involved in the project.

Liability insurance is essential to protect against lawsuits or claims. This can help pay legal costs if someone suffers an injury or property damage as a result of your work, and it can also prevent certain types of malicious behavior. So, when purchasing builders liability insurance, remember to add liability coverage to your risk management strategy.

UNDERSTANDING WHEN THE PROJECT COVERAGE BEGINS AND ENDS

Construction risk insurance is temporary insurance designed to protect your project from start to finish. Coverage typically begins on the policy’s effective date, which usually coincides with the signing of the construction contract. To ensure ongoing protection, it’s important to know when your policy begins and ends.

Note that coverage can end in a number of ways: on the expiration date, upon occupancy of the property, or upon the start of anticipated use of the property. However, construction timelines are not always predictable. Delays due to weather, a lack of materials, or other unexpected obstacles can extend beyond the policy’s original end date. If this happens, contact your insurance company immediately to explore options for extending coverage and ensuring your project is protected.