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What is Builder’s Risk Insurance and Why do I need it?

Before construction begins on your pre-engineered steel building project you will likely be required to obtain builder’s risk insurance. Although Ohio Steel Construction requires proof of builder’s risk insurance on any construction project in which we are the building contractor, most of our customers have never even heard of builder’s risk insurance let alone know what builder’s risk insurance is.

Builder’s risk insurance is a type of property insurance that protects against damage to existing structures, construction material, and equipment while under construction. Builder’s risk insurance is coverage that protects your interest for construction material, building components, and construction equipment being used in the construction of your building incase these would sustain damage or loss.

There are many types of risks with any type of construction project. While Ohio Steel Construction takes every possible precaution during your pre-engineered building construction project, some aspects are not preventable such as mother nature. The material may catch fire, damage due to high winds, be vandalized, or even be stolen from the construction site. A principle of common law is that any new construction material delivered to the construction site or improvement completed becomes property of the owner. Builder’s risk insurance indemnifies against some of these losses. An example of this would be if Ohio Steel Construction delivers your pre-engineered building system to the construction jobsite and let’s say a weather catastrophe happens such as a tornado causing the materials to be damaged and unusable by Ohio Steel Construction. Your standard property insurance may not cover these materials because the pre-engineered steel building structure was not completed. This may not fall under the liability of Ohio Steel Construction as the steel building contractor due to an act of mother nature. This is where the builder’s risk insurance policy comes into play.

Builder’s risk covers situations such as fire, wind, theft and vandalism and many more. It typically does not cover such situations as earthquake and floods. However, special riders to cover those situations riders can be inexpensive. Depending on where your pre-engineered steel building project is located special circumstances should be considered. Keep in mid builder’s risk insurance will not cover accidents and injuries at the construction site and coverage ends when your Ohio Steel Construction project has been completed and the property is ready for occupancy. If you are going to properly setup your policy, coverage should be effective prior to when the materials are delivered to the job site. Coverage typically ends upon the occupancy or the policy expiration date. Once the Ohio Steel Construction project is completed and the builder risk coverage expires, the owner should take out a permanent property insurance policy on the building purchase a commercial property policy.

Coverage is purchased by the owner, typically as a rider to the existing property insurance policy. Ohio Steel Construction requires builder’s risk insurance coverage but also Builder's risk coverage may be necessary to show proof of insurance to comply with local city, county, and state building code. If the owner cannot obtain the builder’s risk insurance Ohio Steel Construction can obtain the policy. However, many architects and construction professionals believe that it is the property owner who should have the builder’s risk policy, because they have already paid for the improvements to their land, and building materials as well as improvements become the property of the owner. It is far safer for the property owner to obtain the builder’s risk policy, because they already own the building, even while it is under construction. If something happens to the under-construction project, then they should be the beneficiary and control how it is spent. Because the owner already should have a property insurance policy in place it becomes more economical to add a rider to the existing insurance rather than Ohio Steel Construction obtaining a separate policy.

If the project involves pre-engineered steel building addition rather than a new structure, the owner’s existing property insurance policy may already cover the materials, components or equipment during construction, eliminating the requirement for builder’s risk insurance. No matter what your construction situation encompasses Ohio Steel Construction is there to provide help for your pre-engineered steel building project. Ohio Steel Construction is more than just a steel supplier or steel broker we are a General Contractor that has a tremendous amount of experience with projects just like yours. Ohio Steel Construction can pull from this experience as your building contractor and assist your every step of the way.

Disclaimer Ohio Steel Construction is not an insurance professional and the above information is for basic understanding only. You should consult with your insurance agent or insurance company before making any insurance related decisions regarding your pre-engineered steel building project whether Ohio Steel Construction is involved or not.