| Article: Buyers, Protect Yourself During The Building Process - Elizabeth G. Provo, Editor/Publisher |
You’ve made the decision to build, drawn up your plans and selected your builder. You diligently checked licenses of your contractor and obtained current proof of liability and worker’s compensation coverage of employees, and requested the same of any subcontractor being used. You’re ready to break ground. Hold it. Not so fast. Did you remember to call your insurance agent?
What happens if your half built house is hit by lightning, or vandals knock out your brand new windows? How would you replace valuable building materials stolen from the site? Unlike a home that is lived in, a building site can be an open invitation for vandals and is always at risk from nature’s elements. How do you protect your dream home before it’s built?
Anna Holhut, CISR, Personal Lines Specialist, and Vice President of Amherst Insurance Agency, Inc. spoke with me recently about this often misunderstood risk. “As soon as you and your builder have determined the estimated cost of building, call your agent. It is the homeowner’s responsibility any time alterations being planned, whether through new construction or remodeling. Using your plans or the figure your builder provides, your agent can help design the kind of coverage needed.” Coverage for new construction comes in two varieties, a builder’s risk policy, or a newer option, a standard homeowner’s policy. Contrary to how it sounds, a builder’s risk policy covers the homeowner’s risk, not the builder’s. The plan, which commonly covers the dwelling for fire, wind, hurricane, hail, vandalism and theft, may also cover building materials left or stored at the site. Once the home is completed, the policy is cancelled and a homeowner’s policy is put in place.
According to Holhut, she prefers a newer approach to protection against these risks and opts for a homeowner’s policy whenever possible. As the coverages are more generous on a homeowner’s policy, she feels that her clients are better served. Not all insurers will write policies involving new construction, and many agencies still rely on standard builder’s risk policies. Ask around and compare coverages. Remember, a policy with a $20. lower premium that doesn’t cover you for your loss isn’t worth near as much as receiving the correct advice and product that will protect you.
In 1988, while going through a second remodeling on our home, our property was damaged by fire. Although the fire was not caused by the remodeling, there is an increased risk of fire at this time. Had we not notified our agent prior to the work, we would have sustained a major financial loss. Just as with new construction, be sure to notify your agent and raise your policy limits to include the cost of the remodel. If you will not be living in your home during the time, your agent may recommend adding an endorsement to protect your personal property at your new location.
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