The role of builders in society cannot be understated because they are a very integral part of the society.
They are a very important part of what humanity has been able to achieve over the years, from the pyramids to the Versailles and others.
Every house, storey building, complex, etc. that you can see all around you can be regarded as their contribution to the development of humans.
However, a lot of times we never really think of the individuals that make up this large workforce. This should be even more so considering the various hazards and risks involved in their profession.
These include accidents, some of which can be life-altering, totally incapacitating for the individual involved, or even fatal.
Owners of properties under construction by independent contractors can come under serious financial burden or liability if there is an incident that causes damage to the work site during construction.
Thus, there is a need for these individuals to have and be covered by an insurance policy that specifically suits their line of work.
What Is an Insurance Policy?
This basically is a unique contractual agreement between two parties who are the insurer on the one hand and the person or thing to be insured (known as the policyholder) on the other hand.
This contract is signed in exchange for a premium to be paid by the policyholder.
This contract sets out the claims that the policyholder will be legally entitled to get or be recompensed for upon the occurrence of some unforeseen harm or damage to the policyholder.
However, there are unique circumstances that mean that one simple policy cannot meet the needs of every individual or industry. This is why there are different types of insurance policies to fit different needs.
An example of this is the construction industry where there are those with a vested interest in a property under construction by independent contractors who are likely to encounter unique challenges in the course of their engagements.
This set of people need a unique kind of policy to protect them adequately from the risks of their profession. One policy that meets some of this need is the builder’s risk policy.
Builder’s Risk Insurance
This is a unique kind of arrangement that seeks to protect the interest in a property by indemnifying it in the event that it gets damaged during construction. You can read more about this policy here
What Does It Cover?
Primarily, it is about the sum total of the cost of what it would take to either repair, replace, or renew whatever it would cost to finish up a construction project.
This is despite the cost of what might have been damaged or destroyed.
It generally would cover:
- Structural damage caused by harsh weather conditions like storms, hail, or harsh winds. These usually would affect places under construction
- Fire outbreaks that may lead to serious damages and destruction at the site where construction is taking place
- Cases of vandalism that may and occur at construction sites since it might be unprotected, making it easy for vandals to make away with valuables while trashing the venue.
It is however important to note that this protection does not extend to damage caused by natural disasters such as floods, hurricanes, and earthquakes, damage to working tools, and the equipment, the damage that occurs due to a faulty design or use of defective materials.
Crucially, this protection also does not extend to injuries that occur to workers in the course of their work
Considerations to Note While Making These Contracts
Who Is Obtaining the Policy and Who Is the Named Beneficiary:
Generally, it is the owner of the property in question that has to take out a policy but these days, independent contractors might have stronger bargaining power and might get better deals.
Therefore, it should be clearly stated in the contract who the beneficiary is and who it is that is taking out the policy.
For How Long Is the Policy to Last:
These agreements usually subsist only during the duration of the project at hand for which it was made.
However, it is necessary that the date or point of its expiration be clearly stated in the contract.
What Risks are Actually Covered:
This question deals specifically with the clarity of the wordings of the agreement, this is an important thing that a good builder’s risk insurance policy should clear up for you.
The risks purported to be covered by the agreement should not be broader than what the wording of the contract actually says.
Though nobody prays for perils, they however still come and may sometimes result in huge losses for all involved.
However, from what we have seen in this article, the fallout from these losses can be mitigated with the right insurance plan.