Joel Paprocki CIC, CPCU
On a new construction or a property that you do not live in, a builder's risk policy is the type of policy you want.
Builders Risk Insurance is used to insure any building (including commercial and residential) in the course of construction. This can include new construction or additions / alterations of existing buildings. The additions / alterations can include or exclude the existing structure.
Builder Risk Insurance may be used to insure the interest of the building owner, the contractor, or both jointly. Sometimes the contractor will purchase the policy or they will require the owner to purchase.
If you live in the home you will want to contact your homeowners insurance have them increase the value insured for. Since most homeowners do not depreciate in the event of a claim, the increased value should be the cost of the new materials compared to the old materials. Meaning if you installed your old materials today, what is the cost difference between this and your project.
Be aware that if you plan on not being in the home for over 30 days your policy may exclude theft, vandalism, and water damage.
Make sure to have a clear understanding on who owns the material before it is installed in case of damage in transit or stolen from premise before installed on the home.
The best protection is to require anyone that works on your property to carry workers compensation insurance. This is easier said than done, but without workers comp an injured person’s attorney will look for reasons to blame the property owner.
Your homeowners insurance liability will provide protection in most cases, but if you act as the general contractor on a new build your coverage very well could exclude liability because your actions meet the definition of “business activity”, which is excluded.
General liability coverage on your contractors is also important. If for example a plumber puts the wrong pressure value on the plumbing it causes a massive water leak, without general liability to pay the claim you or your insurance policy has to cover the loss.
Note that general liability typically does not cover “their work” meaning the resulting damage is covered, but the plumbing job they did that needs to be redone is their sole responsibility. This makes using companies that stand behind their work important as well.