Whether constructing a new building or a new ship, any project is most vulnerable during the early stages. What happens if your new construction is hit by a fire, flood, or even vandalism while it’s still being built? Builder’s risk insurance is intended to protect you during this gap after the project has begun but before it’s been completed. Here’s what you need to know.
What Does Builders Risk Insurance Cover?
As with many types of insurance, the types of perils that are covered are determined by the policy and the company. The most common perils include:
- Weather-related damage
These are issues that could seriously delay a construction project, in addition to considerably increasing the costs.
Coverage limits will usually be determined by the cost of the construction being completed. Ideally, if the project is destroyed, you will want your insurance to be able to cover the replacement cost.
In addition to protecting the construction itself, builder’s risk insurance also often covers a few other things:
- Materials that are in transit towards the construction site
- Temporary storage locations for the construction materials
- The removal of debris and trash from the construction site.
Do You Need Builder’s Risk Insurance for a Ship?
In some areas, builder’s risk insurance may be required by the local government. In many cases, builder’s risk insurance is required by the contract itself: it’s a way to hedge against issues that could happen during the project. Some construction companies will acquire builder’s risk insurance themselves; other times, the owner of the construction project will need to acquire a policy.
Without builder’s risk insurance, a ship project could be vulnerable to things like weather-related damage or vandalism. These are things that are almost impossible to prevent entirely and could lead to a loss of both time and money.
What if the Project Gets Delayed?
Some builder’s risk insurance policies will also cover the damages that are related to a delayed project. This includes things such as an increase in the amount of interest that the owner needs to pay for their financing or a loss of business related to not being able to use the constructed ship when anticipated. Construction projects can frequently be delayed for reasons that are beyond a company or owner’s control, and this can be a valuable part of a builder’s risk insurance coverage policy.
Merrimac Marine Insurance can help you learn more about the advantages of builder’s risk insurance policies. Contact us today to find out whether it may be right for your upcoming project.
About Merrimac Marine Insurance
At Merrimac Marine, we are dedicated to providing insurance for the marine industry to protect your clients’ business and assets. For more information about our products and programs, contact our specialists today at (800) 681-1998.