Do You Need Builders Risk Insurance When Renovating An Old Home?

Insurance Blog

Have you recently purchased an older home in order to renovate it? If so, it isn't homeowners insurance you need -- it's builders risk insurance. While a property is under construction, it is builders risk insurance that protects you. Here's what you need to know:

What's the Difference Between Builders Risk and Homeowners Insurance?

Homeowners insurance presumes that you're living inside of the home that you're insuring. In fact, there are different types of insurance (Landlord's Insurance) for those who are renting out their home. There are different types of risk associated with a home that is being renovated and a home that is being actively lived in. Homeowners insurance covers issues that could occur while you live in a home (such as robbery, injury, or property damage). Builders insurance covers other risks associated with the property being vacant and worked on.

What Does Builders Risk Insurance Cover?

A builders risk insurance plan will cover:

  • Materials at the construction site. There are likely to be materials that are not yet a part of your home but are about to be, such as loose lumber and drywall. These materials will be protected under the insurance policy.
  • Damage to the construction site. If a mistake happens and damages the structure of your property, it will be covered by your builders risk insurance plan. This could happen if an employee makes a mistake.
  • Injury to individuals on the construction site. While the builder is likely to cover their own employees, other people (such as children) could potentially wander onto a construction site and become injured, especially when it is completely empty.
  • Trespassing and vandalism. Homes that appear to be abandoned are very likely to be subject to issues such as trespassing and vandalism, which a builders risk insurance plan will cover. Of course, a homeowners policy would cover this as well, but might have lower limits. If the property is completely vacant, coverage may not apply under a homeowners policy, whereas it would under a builders risk policy.

Builders risk insurance also covers traditional issues such as fire, theft, and wind and storm damage. However, like many homeowners insurance policies, it isn't likely to cover things like flooding or earthquakes, because these are usually additional insurance policies. Your insurance company can tell you more about what types of insurance policy you're likely to need, and you can shop around for quotes before committing to a premium. 


9 January 2019

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