Builders’ Risk Policies are specific types of property insurance designed to cover properties under construction. These policies primarily focus on insuring buildings during the various stages of their construction. Coverage can significantly differ depending on whether the policy is written on a reporting form or a completed value form:
Key Coverage
- Buildings Under Construction: Provides financial protection from risks like fire, theft, or natural disasters affecting the physical structure of the building during construction.
- Machinery and Equipment: These policies also cover machinery and equipment used on the construction site, which includes both stationary and mobile tools and/devices crucial for project completion.
- Incidental Materials: Components and materials stored on-site and intended for installation in the construction project are another crucial aspect covered under this policy.
Reporting vs. Completed Value Forms
- Reporting Form: In this form of coverage, the value of the building or structure being constructed must be reported periodically to the insurer. This method is ideally suited for lengthy construction projects or projects where calculated risks fluctuate significantly.
- Completed Value Form: This coverage type is predesigned for the total completed value of the project, assuming a specified value at completion prior to the start of construction. It simplifies the insurance since periodic valuations are not necessary.
For a detailed explanation of the regulatory aspects related to builders’ risk policies, it is recommended to refer to state-specific laws and guidelines or consult the Department of Insurance or other related regulatory authorities. Understanding which form aligns with the project needs helps in effective risk management.
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