What determines your builders risk insurance premiums?
Despite your best efforts and care preparation, accidents are inevitable. As a builder, you’re exposed to a plethora of risks from start to finish. With a builders risk insurance policy, you’re able to hold on to your speculative investment, potential profit, and safety.
As any builder knows, two projects are not created equally. As a result, there is no standard builders risk policy, and certainly no easy formula for determining policy costs. However, you can get an understanding of what your insurance provider is assessing when calculating the premiums. Below are a few of the factors!
The Insured Parties
The owner, developer, or general contractor obtains builders risk insurance for a project. The latter and subcontractors should be covered in this policy, in addition to any person whose materials, time, or supplies are going into the project with valid interest. Note that if anyone on the policy has filed bankruptcy in the last ten years, it may have an effect on the policy costs.
A builders risk policy is unique to the property. Premiums are influenced by whether it’s a new construction or a renovation on an existing structure, and the size and square foot of the project. In essence, the larger the project, the higher the insurance costs.
If there are already standing structures that are of high value, these will be taken into consideration. Many policies provide actual cash value coverage for the existing buildings, and replacement cost coverage may increase policy costs.
The Covered Perils
For an ‘all risk’ policy, the project is covered unless it is specifically excluded in your policy. However, if there is any missing coverage, such as earthquake coverage or flood coverage, adding this protection onto your policy may cause premiums to spike.
Talk to the professionals at Nahai Insurance to get set up with the necessary insurance for your construction project – at the right price! Visit us today to get started on securing a policy to suit your building project.