Why You Need Both Builder’s Risk & Liability Insurance

All business owners who perform construction need to have appropriate commercial insurance benefits in place. One of the most essential policies for those in this industry is builder’s risk coverage, which is designed to cover damage done to property under construction. 

However, where builder’s risk coverage will not help you is if you cause injuries or property damage to others. At this point, you might still have to repay them for the losses you caused them, but you will have to turn to a benefit known as liability insurance in order to do so. Though liability coverage is separate from builder’s risk coverage, the two benefits will operate in tandem to provide you with a far-reaching level of protection. 

What does builder’s risk insurance cover? 
Builder’s risk coverage will pay for unexpected, unavoidable hazards occurring in property under construction. Some of the incidents covered by your plan might include: 

• Theft and vandalism 

• Certain weather-related hazards, such as hail and lightning 

• Fire and explosions 

• Vehicles crashing into the structure

Your policy will cover the structure under construction, equipment housed at the work site, and materials that have yet to be installed on the project. Coverage might also cover temporary structures and emergency services fees. 

However, if you were to cause harm to someone else involved in the project, your plan will not pay for their losses. Instead, you will need to turn to a benefit known as general liability insurance. This policy might cover third-party losses like: 

• Injuries on your property 

• Damage to rented commercial space 

• Property damages caused by you or your team to someone’s existing property

When it comes down to who is responsible for paying for damage done to someone’s property, negligence is often the deciding factor in whether you use builder’s risk insurance or liability insurance. 

Negligence is a major concern in construction. After all, if you make mistakes in your work, then you could wind up causing your client a lot of harm (even if you didn’t intend to do so). Still, if you are responsible for harm done to someone else, then you can expect to turn to your general liability insurance as opposed to your builder’s risk policy. 

All in all, builder’s risk insurance is designed to cover damage to a construction project that is under your authority. However, liability insurance extends to losses that affect others, and are your business’s fault. 

If there are any major exclusions that leave you with gaps with which you are not comfortable, additional insurance can be purchased to cover most of these risks. There is a lot at risk in a construction project, and adequate coverage is of vital importance.