One of the most overlooked details of construction projects is the insurance coverage. With all of the details involved, it is easy to overlook the important step of insuring your new building. This summer, I had the privilege of watching the progress of a new building under construction each day while I drove to and from my office. I was surprised to see the building laying flat one day as I drove past – the victim of a strong wind that left the frame and roof of the building in pieces on the ground. This is a reminder to us that it is important to insure buildings while under construction. It is quite common for buildings under construction to sustain losses – theft of materials, vandalism, wind damage, fire and water damage can occur.
Most general contractors will carry insurance for the projects they are responsible for. We also see lots of clients choosing to be their own general contractor. In these cases, it is not uncommon to receive a phone call from a client asking if they can insure a new building, quite often well after the start of construction.
There are a few ways to insure buildings. While a general contractor can purchase coverage, they are passing that cost along to the project owner. As the project owner, it may be in your best interest to control the insurance, so that you are aware of the limits on the policy, deductibles, and even the insurer involved in protecting your asset. This also allows your broker to negotiate terms on your behalf, rather than having the cost of the project built into the overall building cost.
With new construction projects, it is important that you purchase coverage before the foundation is complete. When doing a renovation project or simply adding equipment to an existing structure, the building insurance already in place may be all you need. At times, it is as simple as increasing your limit of insurance, notifying your insurer and advising them of the changes you are making. There are times where a limit increase is not required, such as when you are renovating or updating what is already there so there is no need to increase the limit. In these situations, it is still important to notify your broker and insurer that there are changes being made to your building.
When planning your building project, make sure that you are working with someone who will educate you on the options for insuring your project. Don’t be caught with your building flat on the ground and no insurance to protect you.
Be sure to seek advice and purchase insurance from those who understand your business!