Builder’s Risk Insurance in New Jersey: How to Avoid Mistakes
Builder’s risk insurance in New Jersey covers buildings that are under construction or they are currently undergoing remodeling. That said, builders’ risk insurance coverage protects buildings in various stages of construction, from home during construction to covering building materials.
These types of construction projects present different risks that can happen at both residential property and commercial buildings. Builder’s risk insurance covers the interests of the property owners and contractors at the job sites before they are installed. NJ builder’s risk insurance covers the value of the property until it’s complete.
In case you have been doing research on your own, you might have noticed that builder’s risk insurance goes by different names, including:
- Inland Marine Coverage
- Course of Construction Coverage
Builder’s risk insurance in NJ is in effect for the duration of its term, which is usually 3, 6, or 12 months. Here’s everything you need to know about this type of policy to avoid the most common mistakes people make.
What Does Builder’s Risk Insurance NJ Cover?
Because every building is different, there are no two identical builder’s risk insurance policies. While there is some basic builder’s risk insurance coverage that is the same with all policies, there are some additional endorsements or features that can be purchased. Here are the standard coverages that most builder’s risk policies in New Jersey provide:
- Buildings Under Construction: This type of policy includes coverage for temporary storage buildings, fencing, structures under construction, and retaining walls.
- Comprehensive General Liability: This type of builder’s risk insurance policy covers you in case of claims of bodily injuries suffered by non-employees on your construction site.
- Equipment Breakdown: This coverage helps you pay for the repair or replacement of damaged insured equipment
- Material and Supplies: This coverage is used to pay for the structure that is damaged or stolen.
- Valuable Papers: Construction companies and contractors rely on a lot of important documents such as blueprints, schematics, and other electronic documents. New Jersey builder’s risk insurance covers the research, restoring and replacing important documents and data that were lost.
- Testing: Construction businesses often need to test new equipment. In case there is a physical loss caused by pneumatic, mechanical, electrical or hydrostatic testing, builder’s risk insurance NJ can help you cover the loss. You can add broader testing coverage to the New Jersey builder’s risk insurance policy to include pressure vessels, power generation equipment and boilers as well.
- Identity Restoration: In case you, as a business owner, become a victim of identity theft, this type of policy can help you claim the losses.
- Ordinance and Law: This type of policy covers increased costs used to repair or rebuild due to municipal laws or other ordinances that regulate the construction or repair of damaged buildings.
When you decide what specific type of builder’s risk coverage you need, you should discuss it further with the insurance agent to help you determine the amount of coverage you need.
Keep in mind that some insurance companies offer additional protection for uninsured sheds or temporary structures, for example. That’s why it’s always a good idea to discuss the specific needs of your construction site with a specialist.
Who Needs A Builders Risk Policy?
Builder’s risk policy is often purchased by the custom builders or the property owners. If you are confused by the term “builder,” don’t worry because it can be misleading sometimes. The reason for this is because it can include not only the contractors but also the ultimate owners.
Furthermore, many architects believe that the property owners should have the builder’s risk policy because they are the ones who have already paid for the changes on their land. However, it is considered much safer for the property owner to purchase the builder’s risk insurance in NJ because they already own the building, even when it’s still under construction. On the other hand, suppliers of materials are usually not considered candidates for this type of policy, even though they have a lot of interest in property that is used in the construction.
In short, here are the people who usually benefit the most from carrying builder’s risk insurance in New Jersey:
- Property owners
- House flippers
- Retail companies
- Investment companies
What Type of Damage Does Builder’s Risk Insurance NJ Cover?
To understand the coverage that builder’s risk insurance provides, it’s important to know what type of damage is covered on most policies:
- Weather (including wind, lightning, and hail)
- Theft (employee theft is excluded)
Big insurance companies that cover builder’s risk in NJ usually include these coverages. However, keep in mind that some insurers offer more robust policies than others. That’s why it is always considered a good idea to shop around and compare prices and policies before you make the final decision.
How Much is Builder’s Risk Insurance?
Typically, this type of policy is in the range of one to four percent of the construction cost. However, it also depends on the type of coverage and exclusions that your specific policy has. Having a good insurance company by your side is vital as it helps you solve any potential claims during the building process.
While some companies are able to cover the soft costs, you will probably need to ask the insurance company to include them in your insurance policy. You should also be aware that this might increase the total cost of your builder’s risk insurance.
What is Excluded from Builder’s Risk Insurance NJ?
Although considered a robust policy, builder’s risk insurance still has some things that are specifically excluded from coverage. For example, land and water are not covered by this policy. In this case, land includes the land beneath the covered building or structure, while water means all water on the site.
Here are the situations in which New Jersey builder’s risk insurance won’t pay for the damages:
- Sub-contractor equipment
- Professional liability
- Tools and equipment
- Bodily injuries
Don’t forget that individual policies may have different exclusions. That means you’ll need to read your policy thoroughly to understand what is excluded from coverage and whether you need to add some additional coverage to your builder’s risk insurance in NJ.
If you found this article useful, make sure you also read more about the best ways to protect your commercial property as a property owner!
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