Nestled between Clermont, Winter Garden, and Windermere lies the burgeoning neighborhood of Horizon West, Florida. With easy access to both Disney World and downtown Orlando, it’s easy to see why Horizon West could make 34787 the next “it” zip code.
Local builders seem to think so. Construction is underway for dozens of subdivisions in the area. And one thing that no new construction project should be without is adequate builder’s risk insurance.
Just because new construction homes aren’t occupied doesn’t mean they aren’t full of risk. Here’s everything you need to know when purchasing builder’s risk insurance.
What Is Builder’s Risk Insurance?
Builder’s risk insurance protects an individual’s or business’s “insurable interest” in a structure while it’s under construction. New construction can be an extremely risky economic venture. Builder’s risk insurance provides protection from the financial hardship that would arise if an insurable loss were to befall the construction project.
Anyone with an insurable interest in the property (i.e. anyone who would experience a significant financial loss) can purchase a builder’s risk policy, including homeowners.
What Does Builder’s Risk Insurance Cover?
Broadly speaking, builder’s risk insurance provides coverage for homes, commercial properties, and other structures while they are being constructed. In most cases, this means that any tools, fixtures, and equipment being used to build the property are protected against accidental loss and damage from things like theft, vandalism, and severe weather.
It may also cover materials and equipment held off-site for future use.
Builder’s risk insurance does not generally provide any liability coverage; you would need a general liability policy for that. It also does not provide protection for the home’s contents, as most new construction homes should not contain any personal possessions.
As always, read your policy carefully so you understand what is covered or excluded.
Do I Need Builder’s Risk Insurance?
It’s safe to say that the property owner for every construction project needs to carry a builder’s risk insurance policy. However, your circumstances will dictate who the “property owner” is.
If you bought your home from a major construction company like Meritage or Pulte, then the builder is usually the owner until the property changes hands. In these cases, the construction company will likely have adequate insurance, as any loss or damage related to the property would only be a liability for them.
However, if you are having a home custom-built on a plot of land you own, you would probably need a builder’s risk policy of your own in addition to a homeowner’s insurance policy.
In either case, it’s always a good idea to verify that your builder has the proper amount of coverage. Request a copy of their certificate of insurance to verify the types of coverage they carry.
Homeowner’s Insurance During Construction
It might seem a little silly to purchase a homeowner’s insurance policy on new construction. After all, there’s no home yet! But home insurance provides an extra layer of protection that a builder’s risk policy doesn’t.
Again, if you are purchasing a new construction home in a brand-new subdivision, homeowner’s insurance isn’t necessary until the property is legally in your name. But if you’re having your ancestral dream home built on the site of your grandparents’ old farm, home insurance is crucial.
For starters, you’ll need liability coverage in the event that anyone—welder, visiting friend, or trespasser—injures themselves on the job site and decides to sue.
Another form of coverage that could come in handy is catastrophic ground cover collapse. Here in Florida, you never know when a sinkhole could swallow up your future home.
Of course, homeowner’s insurance is the most basic form of insurance that you will need once you move into your new home. After all, loss, damage, vandalism, and other threats don’t go away once the last power tool is packed up.
Everyone’s assets, risks, and needs are different. Make sure your home is protected right from the beginning with the proper insurance policies and coverage amounts for you.
Coverage When You Need It
Whether you’re building in Horizon West, Clermont, or anywhere around Orlando, no construction project is complete without builder’s risk insurance.
Construction companies and property owners alike have a lot riding on that new set of homes, office suites, and warehouses, and the construction industry is inherently risky. Protect your assets with the right amount of builder’s risk insurance.
At Harry Levine Insurance, we’ve connected hundreds (?) of clients with commercial bonds, builder’s risk, and other construction insurance policies. Our knowledge, experience, and customer service is second-to-none and we can’t wait to discuss your options so you can build an extensive network of coverage for your own home, car, or business.