Top 10 Risks for Builders and How to Protect Against Them
Building contractors face all kinds of risks while they’re working on the building site, whether they’re remodeling an existing home or erecting a brand new one from scratch. To protect their assets and income, contractors need to be knowledgeable about which risks they face and how to protect themselves against them.
Whether you’re just getting started as a builder or have been doing it for years, this guide to the top 10 risks for builders will help you develop risk-management strategies that will keep your business successful in every sense of the word.
Liability
One of the top risks builders face is liability. If something goes wrong with the construction project, you could be held liable. That’s why it’s important to have builder’s risk insurance, which can help cover the cost of damages. There are a few different providers of this type of insurance, so be sure to shop around for the best rate.
Property damage
One of the top risks for builders is property damage. This can include damage to the structure itself, as well as any tools, equipment, or materials on site. Builder’s risk insurance can help protect against this type of loss, covering the cost of repairs or replacement. For additional protection, you may want to add coverage for your business assets. Some providers may offer both types of coverage in one policy.
A quick search on the internet should yield a list of providers in your area that offer builder’s risk insurance at competitive rates.
Third-party personal injury
One of the top risks for builders is third-party personal injury. This can happen when someone is injured on your property, or if your work causes damage to someone else’s property. Builder’s risk insurance can help protect you from the cost of these claims. There are many providers of builder’s risk insurance, so be sure to shop around and find the best coverage for your needs.
Contractor performance
Contractor performance is one of the top risks for builders. Poorly performing contractors can cost you time and money, and in some cases, may even put your project at risk. There are a few things you can do to protect yourself against this risk:
1) Make sure you thoroughly vet your contractors before hiring them. Check references, previous work history, etc.
2) Have a clear contract in place that outlines the scope of work, timeline, and expectations.
Delay in completion
One of the top risks builders face is delays in completion. This can be due to a number of factors, including weather, material shortages, or problems with the site. Builder’s risk insurance can help protect against these delays by covering the cost of additional materials or labor. Be sure to shop around and compare providers to get the best coverage for your needs.
Product liability/defects
One of the top risks builders face is product liability or defects. This can happen when a builder uses a defective product in construction or if they fail to properly warn consumers about the risks associated with using a particular product.
Product liability claims can be very costly, so it’s important to have insurance in place to protect against them. There are a number of different providers of builder’s risk insurance, so be sure to shop around and find the one that best meets your needs.
Business income/extra expense
One of the top risks for builders is loss of business income or extra expenses incurred due to a covered event. Builder’s risk insurance can help protect against this by covering the cost of lost income and/or additional expenses. Some common covered events include fire, wind, hail, theft, and vandalism.
Inflation
Inflation is one of the top risks for builders. It can increase the cost of materials, labor, and land. Inflation can also reduce the value of your completed project. To protect against inflation, you can purchase builder’s risk insurance from a provider like The Hartford. Builder’s risk insurance protects against loss or damage to your project during the construction phase.
Valuation increase/decrease
According to the National Association of Insurance Commissioners (NAIC), Builder’s Risk Insurance is a type of property insurance that covers buildings under construction. The cost of this coverage depends on various factors, including the value of the property, the location, and the type of construction. Builder’s Risk Insurance typically costs between 0.5% and 2% of the total project cost but can vary depending on the project.
Not enough building permits
One of the top risks for builders is not having enough building permits. This can cost you time and money, as well as put your project at risk of being shut down. To avoid this, make sure you research the permit requirements for your project in advance and budget for them accordingly.
You should also work with a reputable permit provider who can help ensure you have all the permits you need.
