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. It falls under the category of property insurance. It normally compensates the policyholders when the insured properties get damaged.
When damage occurs, there can be many people affected. As much as their duties will take them to different points of the building, they still need to get be involved in the policy. There are a few people who must get a mention. They are the policyholders, the constructors, and the contractor.
This insurance cover works by catering to the loss experienced in certain parts of the building under construction. This also applies when the building is under repair or renovation. The length of the cover extends from when the building was being planned to after its construction had 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, which the insurance company usually does not cover for when they cause damage and loss to the property. There are occasions when they can opt to cover them. They are usually extreme acts of force, such as wars, riots, or acts of nature like hurricanes, floods, and earthquakes.
The underwriters determine the amount of insurance applicable in each case of damage. When the damage inflicted upon the building does not lead to its complete annihilation, there is something in the form of money which the owner shall receive from the insurance company. Those apply to short-term policies, covering three months, six months or a year. If the policyholder feels a longer period will serve them better, they can ask for the periods to be extended.
When the policyholder is signing up for these covers, he/she can choose the preferred option regarding replacement value, actual value, or 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 does not factor in depreciation, but also includes inflation.
This policy finds popularity in extreme cases. A policyholder has the option to improve their cover to a stage they can work with. They can do the upgrading, or purchase the cover as it is presented by the insurance company.