Contractors involved in building rehabilitation often do so to preserve important dated physical property characteristics or historical attractions. The work may also just be tax-credit motivated or an option to lower new-construction overhead. This type of building development involves challenging builders-risk exposures and thus insurance is hard to place.

Related: understanding construction bonds

Builders Risk Insurance

Builders Risk insurance is specialty coverage that protects from building damages during the construction process. This includes fire damage, wind damage and damages resulting from other covered accidental occurrences. Unlike the standard builders risk exposures, the rehabilitation property values don’t start at zero. This is due existing property features, like:

• Foundations
  
  
• Framing
  
  
• Walls
  
  
• Rooftops
  
  

In the course of demolition and rehabilitation, a sub-limit is generally applicable to the value of the building shell.

Allowing partial occupancy prior to construction completion is an insurance concern as well, particularly with commercial rehabilitation projects.

Projects that begin with an existing structure are required to have the following:

• Fire protection
  
  
• Welding and cutting safety measures
  
  
• Shielding fending
  
  
• Proper lighting
  
  
• Security guard servicing
  
  

For a more in-depth discussion about builders risk insurance for the rehabilitation project, speak to the experienced insurance specialists at Prime Insurance.

PRIME Insurance is a three-generation family-run independent agency. We’re proud partners with many of the leading companies in the industry – big names such as ACE, AmTrust, ASI, ASSURANT, CHUBB, CNA, Employers, FOREMOST, Liberty Mutual, MetLife, PROGRESSIVE, Safeco, StillWater, Travelers, USLI, ZURICH and more. This gives us the ability to provide all forms of nationwide coverage at competitively lowest quotes. Visit us on our online insurance website or email us at PRIME [at] primeins [dot] com or call us at 732-886-5751 and HAVE A PRIME DAY™!

Summary: It’s essential for those in construction to buy Builder’s Risk Insurance to protect from losses and damages. As opposed to standard construction, a building rehabilitation project coverage incorporates further challenges.