Builder Risks Insurance in Arizona

Understanding builder's risk insurance in Arizona is crucial for contractors, builders, and homeowners alike. This unique form of insurance provides protection for buildings under construction, renovation, or repair. In this comprehensive guide, we will delve into the intricacies of builder's risk insurance, its importance, and how it operates in the state of Arizona.

Builder's risk insurance, also known as course of construction insurance, is a specialized type of property insurance. It covers a building where the building or insured area is presently being constructed or heavily renovated. It can cover just the structure, or also the materials on site waiting to be installed or transported to the job site and is a type of insurance that most owners will ask every contractor to carry.

The builder's risk insurance policy will pay for damages up to the coverage limit. The limit must accurately reflect the total completed value of the structure (all materials and labor costs, but not including land value). The construction budget is the best source for determining the appropriate limit of insurance.

Construction projects are subject to a multitude of risks. At any moment, your project could be jeopardized by natural disasters, theft, or vandalism. Without proper coverage, you as a contractor or project owner bear the brunt of the financial loss. Builder's risk insurance provides the necessary coverage to protect your financial interest in a construction project.

Moreover, a builder's risk insurance policy can be structured to cover expenses that are not typically covered by traditional property insurance policies. For instance, it can cover the cost of removing debris or extracting pollutants, fees associated with standing up to building codes, and losses from temporary relocation.

Policy Types

In Arizona, builder's risk insurance can be purchased in three types: a policy for a specific project, a policy covering all projects of a contractor, or a policy covering a specific construction type. The choice of policy type depends on the nature and frequency of construction projects undertaken.

It's also important to note that builder's risk insurance policies in Arizona are typically written on an "all risk" basis. This means the policy covers all risks of physical loss, except for those specifically excluded. Common exclusions include ordinary wear and tear, acts of terrorism, and damage caused by faulty design or workmanship.

Claim Process

In the event of a loss, the claim process for builder's risk insurance in Arizona is straightforward. The insured party must notify the insurance company immediately, make temporary repairs to prevent further damage, and then submit a claim detailing the loss. The insurance company will then assess the claim and, if approved, reimburse the insured party for the covered loss.

It's important to keep accurate records of all construction activities, as these can be crucial in supporting a claim. Photos, contracts, and receipts should all be kept in a safe and accessible place.

Choosing the right builder's risk insurance policy in Arizona involves considering several factors. First, the policy's coverage limit should reflect the total estimated value of the completed project. This includes the cost of all materials, labor, overhead, and profit.

Second, the policy should cover a broad range of perils. While most policies are written on an "all risk" basis, it's important to review the policy's exclusions and ensure you're comfortable with them. If necessary, you can purchase additional coverage to protect against specific risks not covered by the standard policy.

Finally, consider the policy's duration. A builder's risk insurance policy is typically effective until the project is completed and ready for use or occupancy. If the project is delayed, you may need to extend the policy's term.

Builder's risk insurance is a critical component of any construction project in Arizona. It provides financial protection against a wide range of risks and can be tailored to suit the specific needs of your project. By understanding how this insurance works, you can make informed decisions and ensure your project is adequately protected.

Remember, choosing the right insurance policy is not just about finding the lowest premium. It's about understanding the risks associated with your project and ensuring you have the right protection in place. With the right builder's risk insurance policy, you can focus on what you do best - building and creating.