Your general liability policy should cover a lot of your risks if you work with a company that writes them specifically for the construction industry, and that leads many builders to assume that it covers them well enough they don’t look at builders’ risk insurance. The two policies are not the same thing, though, and they mostly don’t even cover the same areas. Unlike additional liability policies, builders insurance coverage is about protecting your equipment and materials, not about protecting you from liability.
What Is Covered By Builders’ Risk Policies?
Damage to the site, the actual structure under construction, and your equipment is all typically covered in one of these policies. Policy limits and exclusions may change some of these protections, but the common inclusions are:
- Fire or explosion
- Lightning strike, hail, and other extreme weather protections
- External theft and vandalism coverage
- Damage from collisions with aircraft or other vehicles
These policies typically also carry exclusions, and additional insurance is needed if your job site is at risk because of excluded sources of damage. Exclusions typically include earthquakes, war, and other acts of government. They might also exclude damage in the covered categories if it comes from faulty workmanship or mechanical breakdown. Risk insurance also rules out damages caused by broken contracts. There are both insurance policies and bond options to take care of those excluded contingencies, though. The key is finding the right constellation of risk management products to fill in those gaps, and business risk coverage fills in a lot of gaps left open by other policies.