Words by Matthew Seales, Business Development Underwriter, Island Heritage Insurance
So you have decided to build... whether it’s a project for rental income, renovations or building your dream home, it usually goes a bit like this:
- Government fees
- Contractor and materials
But chances are you will need one last thing on your checklist: Contractors All Risk Insurance.
Here, we will answer all the questions you might have on Contractors All Risk Insurance
. What is it? Why do I need it? What does it cover? How long will I need it for?Contractors All Risk Insurance
typically runs parallel to your project. It provides you with coverage for property damage, third-party claims or damage claims. The three primary types of risks on a construction project are damage to the property – which can include improper construction of structures – the damage which may occur during a renovation or damage to the construction plant (a temporary work-erected site).
If you are getting financing through the bank, chances are it will request you have insurance, but if you are self-financing the value of insuring your contract is to ensure your project is covered for unforeseen events like earthquakes, hurricanes, or even fires on the site.
Now, there are a couple of factors which will determine the cost. First is the length of time: it is always important to make sure you cover the start to finish of the project. Insuring mid-project can result in higher premiums or even exclusions to your project. Don’t cut corners. Insure it for the right length of time, and if the project runs over you can request an extension from your insurer. Second, the value of the contract should match the value of the construction. You don’t need to include the land value, but, much like the length of time, it is extremely important you insure it for the full value of the contract to prevent any issues if you should need to make a claim.
Each insurer will offer different terms and conditions. It is always wise to speak with an underwriter to confirm you are getting the necessary coverage required. Should you complete your project ahead of time, most companies will consider this and offer a credit towards your property insurance, but this should be discussed with your insurance company.
From blueprint to built, your property will be covered with Contractors All Risk Insurance