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Builders Risk Insurance Vs. Contractors Insurance


If you are in the construction business, you need the right types of insurance coverage to protect yourself. You are likely to need builders risk insurance in addition to contractors insurance. Together, these two forms of coverage can protect you against certain losses.

What Is Builders Risk Insurance?

Builders risk insurance is designed to cover a contractor’s equipment, materials, and property related to the construction of a building. Coverage continues until the project is complete and the owner signs off. It can provide protection against a number of risks, including:

  • Theft
  • Vandalism
  • Mechanical breakdown
  • Earthquakes
  • Weather
  • Water damage
  • Government action

Coverage under a builders risk insurance policy may be extended to protect scaffolding and other temporary structures. It may also cover the costs of debris removal or charges made by the fire department service.

What Is Contractors Insurance?

Contractors general liability insurance is essential for anyone in the construction industry. It provides protection from liability for bodily injuries or property damage. It does not cover your own property or equipment. It protects you in case of an accident and any liability that may arise as a result, including legal fees to defend yourself in court, if necessary. For example, contractors insurance will kick in if:

  • You or your employees cause injury or property damage to others
  • Someone is injured on your property
  • You are renting a commercial space that becomes damaged
  • You are sued for libel, slander, copyright infringement, or false advertising

Contractors Insurance & Builders Risk Insurance: Which Policy Covers What?

General contractors, developers, and property owners purchase contractors general liability insurance to protect building materials and equipment and structures while they are being built. You may be required to carry this coverage as a safeguard, as general contractors are often held liable for work their subcontractors perform. For your contractors insurance to apply to damage caused to a construction project, the incident must have occurred at a covered location (typically the jobsite) and you must be legally liable for the damages.

Generally, builders risk insurance covers damage related to external events – not related to the construction work. However, policies vary. Some all-risk builders policies cover a variety of loss events, except for those specifically excluded. In such a case, a builders risk insurance policy may cover property damage that occurs in the course of construction. There is a gray area between these two types of coverage because either may be able to cover damage to a project caused by a subcontractor.

What Insurance Coverage Do You Really Need As A Contractor?

Having the right insurance coverage is an important part of doing business in the construction industry. You must be protected in case you are working on a building and something goes wrong. Because of the gray areas between the different types of coverage, it can be a complicated process to determine what types of policies to purchase and where to file a claim, if the need arises.

Our experienced agents are here to assist you. We can help you get the best quotes for the coverage you need and advise you on which policy applies if a loss occurs – builders risk insurance or contractors insurance.

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