Don’t Take Chances: Get the Right Protection with Builders Risk Insurance

Construction & Real Estate, Property & Casualty

Winter is upon us, but that doesn’t stop the construction industry from continuing to thrive. And no matter the building project or the time of year, one thing is always a factor: risk. Specifically, builders’ risk.

That’s where builders risk insurance comes in. Builders risk insurance is a limited term policy that covers a building project from start to finish. It protects 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 of loss.

Consider this… many construction projects are funded by a loan that uses the project itself as the collateral. In the event of damage or destruction not covered by insurance, the project owner may not have the financial resources to rebuild (or rebuild in a timely manner). This may result in a loss of expected income, which in turn may result in the owner’s inability to repay the loan. By requiring builders risk insurance, the lender is protecting its construction loan.

Maybe it goes without saying, but all insurance policies are not created equal. When it comes to builders risk insurance, that’s especially true. Unlike other major types of insurance, builders risk is unregulated. Policies vary widely from company to company, can be extremely complicated, and may contain exclusions that could be devastating to the owner in the event of a loss.

Make sure you have advisors on your side to:

  • Use time-tested tools to identify and protect against risk
  • Partner with insurance companies that provide the most comprehensive policies
  • Understand how to analyze the bank documents and construction contracts which specify the builders risk coverage required
  • Advocate on your behalf in the event of a claim by methodically analyzing your policy and skillfully negotiating with the insurance company to help you get the maximum coverage amount possible

M3’s specialized Construction & Real Estate (CRE) professionals can help. Contact your M3 Account Executive to learn more.

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