What Is Covered Under Course Of Construction Insurance?


BuildFax, a company that tracks construction information for millions of U.S. homes, reported that the number of household remodeling projects has increased steadily over the past 23 months. Many are choosing to remain in their homes and make necessary modifications due to declining home values. In addition, buyers are buying foreclosed properties at rock bottom costs and remodeling to meet their needs. It’s vital that homeowners know they might need Course of Construction Insurance, also known as Builder’s Risk Insurance, because there are so many construction projects underway.

For a new or remodelled construction project, the property owner can buy a Course of Construction insurance policy. While it is not necessary in all cases, some state and local building codes may require it to be purchased before construction can start. A policy will also be required if a homeowner takes out a loan to finance the project. What coverage is included in this policy?

There are two types of policies

Two main types of policies are available: All Risk and Specific Peril. An All Risk policy is more expensive but will offer homeowners and contractors the best protection. It covers all risks, except those that are specifically excluded by the policy. A Specified Peril policy, on the other hand, covers only those risks that are specifically outlined in it. If an owner has a Specified Peril insurance that covers damage caused by lightning, and the house is damaged by it, then the damages would be covered. The damage would not be covered if lightening strikes the next-door home, starting a fire that spreads to the under-construction house. The policy did not specify fire protection and the peril (in this case, lightening) was not to the dwelling. It struck the next-door house. The homeowner would have been covered by an All Risk policy if the policy excluded fire damage. All Risk policies cover a greater range of damages. The contractor should ask homeowners if they are purchasing the policy.

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What are the Risks?

There are many types of coverage, but the majority of All Risk policies cover your project against fire, wind and lightening, hail and theft, vandalism and other types water damage. Owners can also request extensions or additions to their policies. A rider can be purchased to protect materials as they are transported or stored. A policy can also be extended to cover flood and earthquake damage. You are also covered for lost labor hours. If someone damages property or destroys materials, they can be reimbursed.

Insurance companies won’t cover damage that is the result of poor workmanship, architecture or materials. The owner may not be aware of employee theft, fraud, penalties for breaching contracts, and time lost due to compliance with government regulations. Therefore, it is important for owners to ensure that they hire only reputable contractors. All Risk doesn’t include liability coverage. Before any project is started, property owners need to verify the Worker’s Compensation coverage of their contractor.

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What Structures Are Included?

What happens if the property has a dock? A fence? A pool house? The policies only cover buildings and structures that are involved in the construction project. The equipment attached to the dwelling is covered as well, including boilers, furnaces, security, and electrical systems. Structures and fixtures that are not attached are not covered. This includes walkways, fences pools sheds barns docks landscaping.

According to BuildFax. October 2011 saw a 40 percent increase in home remodeling rates than October 2010. For a smooth and successful project homeowners should discuss with their insurance company adding a policy for the estimated remodel time.