A Quick Guide to Building Insurance
During the construction a building, there is always a chance that damage or loss can occur to it. This is what made builder’s risk insurance possible. This is a type of property insurance. It covers the losses experienced by the owner when the property is damaged.
When damage occurs, there can be many people affected. They may be working on different parts of the building, but this will not stop them being named on the same policy. There are a few people who must get a mention. This include the policy owner, the building constructors, as well as the contract.
The insurance cover shall cover some parts of the building under construction against damage. You will enjoy those benefits even when the building is simply being repaired or renovated. The timeframe of the cover starts from the building’s planning phase, all the way to after the construction has been completed.
You can expect to find building materials at the site of an ongoing construction. They stand a chance of getting lost, and so shall be covered under the policy. This entails the building, the tools in use to construct it and the materials in question.
The builder’s insurance policy pays when there has been damage to the property through certain perils. These perils include cases of fire, vandalization, damaging winds, lightning strikes, and theft.
There are exceptions to the application of the cover, which prevent the insurance company from offering any form of compensation. In certain circumstances, they can relax their rules and accept to offer compensation for these exceptions. Those events that fall in this category are usually referred to as extreme acts of force, and cover occurrences such as wars, riots, or acts of nature like hurricanes, floods and earthquakes.
Underwriters will deliberate and settle on the applicable amount of insurance for each case of damage. If the building does not get destroyed due to what was covered for, there is a preset sum that the owner gets. This is applicable to short-term policies, spanning over a three month, six month or a yearly period. If the owner wishes for longer periods, they can request for those they want.
While the policyholder is doing the actual purchasing of the policy; they can select between replacement value, actual cash value, or even extended replacement value.
Replacement value earns the policyholder a similar value of the lost materials, which does not factor in depreciation. Actual cash value factors in depreciation. Extended cash replacement value is replacement value plus inflation.
You shall see its application mostly in extreme cases. Policy owners can, however, improve on their covers, to make them better as they wish. They can do the upgrading, or purchase the cover as it is presented by the insurance company.