Florida Builders Risk Insurance is an insurance policy that covers structures that are under construction or renovation. It can be purchased by either the property owner or the general contractor, and covers all stages of the construction process from start to finish, including the receipt of a Certificate of Occupancy.
In Florida, builders' risk policies are regulated by the state’s Department of Financial Services. This department sets forth strict guidelines for what is covered and how much coverage is necessary to protect contractors and property owners from financial loss due to unexpected events while constructing or renovating a building.
How Does Builder's Insurance Work in Florida?
Builder's Insurance in Florida works similarly to other states. It is designed to protect the contractor and property owner from financial loss due to unexpected events during construction or renovations. This coverage will typically cover damages caused by fire, theft, vandalism, windstorm, hail, lightning, and explosions.
This type of policy is temporary and designed to last for the duration of the project. It is important to remember that builder's insurance does not cover damage caused by defective artistry, faulty materials, or negligence on the part of either the contractor or property owner.
What Does Builder's Risk Insurance Cover in Florida?
Builder's risk insurance is specifically designed to protect against perils that occur during the construction or renovation process. This type of policy is designed to provide coverage for physical damage to a structure resulting from the following:
- Windstorm
- Hail
- Lightning
- Explosions
- Theft
- Vandalism
- Explosion or fire
- Vehicle collision
Builder's risk insurance can also cover debris removal and replacement of temporary structures such as scaffolding.
It is important to note that builder's risk insurance does not cover damage caused by faulty workmanship, defective materials, or negligence by either the contractor or property owner. Additionally, this coverage does not provide liability protection for the contractor or property owners.
Do I Need Builder's Risk Insurance in Florida?
If you have a financial interest in a construction project in Florida, it is always a good idea to have a builder's risk insurance in place. This type of coverage can provide peace of mind and protect you from unexpected financial losses due to accidents or other unforeseen events that may occur during the course of the construction or renovation project.
Here is a list of individuals to add to your builder's risk insurance policy:
- Property owner
- General contractor
- Subcontractors
- Material suppliers
- Equipment lessor
- Lenders
- Architects
In addition to having adequate coverage, it is important to know your responsibilities as the property owner or general contractor. Make sure you review all contracts and understand who is responsible for what in case of any damage or delays due to an unexpected event.
How Much Does Builder’s Risk Insurance Cost in Florida?
There are a number of factors that will determine the cost of your builder's risk insurance policy in Florida. These include:
a) Project type: The type of project being undertaken is a key factor that will determine the cost of builder's risk insurance in Florida. Projects can range from new construction to renovation and remodeling projects, so it is important to consider the specific nature of your project before buying a policy.
The size and scope of your project will also affect the price you pay for coverage. For example, larger projects may require more coverage than smaller ones and, therefore, will cost more to insure.
b) Location: The location of the project is also an important factor that will affect the cost of builder's risk insurance in Florida. Areas with a high frequency of natural disasters such as hurricanes, flooding, or tornadoes will typically cost more to insure than areas with a lower frequency of such events.
c) Construction type and materials: The type of construction and materials being used in the project are also key factors that affect the cost of builder's risk insurance in Florida.
The more expensive or complex the materials and construction methods, the higher the insurance cost will be. For example, if you're using specialized building materials such as steel framing or concrete, you can expect the cost of your insurance policy to be higher than if you were using more traditional materials such as wood or brick.
Additionally, specific construction methods, such as wind-resistant construction, will also increase the cost of builder's risk insurance.
d) Expected completion date: The project's expected completion date is another factor that will affect the cost of builder's risk insurance in Florida. Shorter projects tend to have a lower cost, as there is less time for potential damage or other issues to occur during the construction. On the other hand, longer projects that take a significant amount of time to complete may cost more to insure due to the increased potential for damage or delays during construction.
The insurance company may also require additional assessments or inspections throughout the project in order to ensure all risks are properly managed.
e) Amount of Coverage: The amount of coverage you need for your project will also affect the cost of builder's risk insurance in Florida. Generally, the more coverage you purchase, the higher the cost, as there is more risk to insure.
Make sure to review all contract documents and understand what coverage is required by any lenders or investors involved in the project before determining how much coverage you need.
f) Expertise and experience of contractors: The expertise and experience of the contractors you hire is also a factor that will affect the cost of builder's risk insurance in Florida. Contractors with a proven track record of success are more likely to receive discounts on their insurance policies due to their lower risk profile. On the other hand, inexperienced contractors may be required to pay higher premiums as they are seen as having a greater risk of making mistakes during the project.
g) Claims history: Your claims history is also an important factor that will affect the cost of builder's risk insurance in Florida. If you have a history of filing claims, you can expect to pay higher premiums than someone with no claims on their record. It is important to keep accurate records of all claims filed, as this will help the insurance company assess your risk profile more accurately.
h) Deductible: The deductible you choose for your policy also affects the cost of builder's risk insurance in Florida. A higher deductible will typically lower the premium you pay, as the insurance company will not have to cover as much of the cost in case of a claim. However, be sure to keep in mind that you may need to pay out-of-pocket expenses if you choose a deductible that is too high and you end up needing to make a claim.
The cost of a builder's risk insurance typically costs between 1-5% of the total construction budget. For example, if the construction budget is $100,000, a three-year builder's risk policy would cost between $300 to $1,300 per month in premiums.
Does Builders Risk Insurance Cover Liability?
No, builder’s risk insurance is not designed to cover liability. It is a type of property insurance that covers the property being constructed, as well as the materials and equipment associated with the project. This type of insurance does not provide protection for any potential legal liabilities resulting from accidents or damage caused by the contractor or anyone else involved in the project. For this reason, it is important to purchase an additional liability insurance policy to provide protection in legal disputes or claims.
Liability insurance can help pay for legal costs if someone suffers injury or property damage due to your work and can also provide coverage for certain types of malicious acts.
What to Ask Your Insurance Company Before Purchasing Builder's Risk in Florida
Before purchasing builders' risk insurance in Florida, there are some questions you should ask your insurance provider to ensure you are getting the best coverage for your needs. Some of these questions and their answers include:
Does the policy cover all construction materials, equipment, and labor?
Yes, a good builder's risk policy should cover all materials and equipment used in the construction project and labor costs.
Does the policy cover losses due to theft or vandalism?
Yes, most policies will cover losses due to theft or vandalism, provided they are not caused by the insured.
Is there a deductible required for this type of insurance?
Yes, most policies require a deductible that the insured must pay before any claims can be made.
Does the policy cover losses due to natural disasters?
Yes, most builders' risk insurance policies provide coverage for losses due to natural disasters such as hurricanes and floods. The coverage will depend on the policy and the type of natural disaster that occurs.
Does the policy cover liability claims?
No, builder's risk insurance does not cover liability claims. For this type of protection, you should purchase a separate liability policy.
Any Question? Contact Us Today
At Bellken Insurance Solutions, we are committed to providing the best options for builder's risk insurance in Florida. If you have any questions or would like to discuss your project with one of our experienced representatives, please don't hesitate to contact us today.
We look forward to helping you secure the right type of coverage for your project!
Builder's Risk Insurance FAQs
Yes, Builder’s Risk Insurance policies are typically set for a specific period, but they can be extended if your construction project takes longer than anticipated. It’s crucial to request an extension before the policy expires to avoid any lapses in coverage. Keep in mind that additional premiums may apply for the extended period, so discuss this with your insurance provider as early as possible to ensure continuous protection. Once your construction project is complete, Builder’s Risk Insurance coverage ends. At that point, you should transition to a permanent property insurance policy, such as Commercial Property Insurance, to protect the newly completed building. This ensures ongoing coverage against risks like fire, theft, and natural disasters that could affect the property after construction. Yes, Builder’s Risk Insurance typically covers damage caused by subcontractors working on your construction project. However, it’s essential to review the specific terms of your policy, as coverage may vary. If subcontractor-caused damage is not fully covered, you may need to ensure that your subcontractors carry their own insurance, such as general liability insurance, to provide additional protection. Soft costs, such as interest on loans, legal fees, and additional expenses incurred due to delays in construction, may be covered under a Builder’s Risk Insurance policy if they are specifically included. These costs are not automatically covered by standard policies, so you may need to add an endorsem*nt to ensure they are included. Soft cost coverage can be crucial in minimizing financial impact if unexpected delays or other issues arise during construction. To reduce the cost of Builder’s Risk Insurance, consider implementing several strategies, such as improving site security, using high-quality materials, and hiring experienced contractors with good safety records. You can also opt for a higher deductible, which can lower your premium. Additionally, bundling Builder’s Risk Insurance with other insurance policies you hold with the same provider may lead to discounts. Always work with your insurance agent to find the most cost-effective coverage options without compromising protection.
Can I extend my Builder’s Risk Insurance if my construction project takes longer than expected?
What happens to my Builder’s Risk Insurance policy once the construction is complete?
Does Builder’s Risk Insurance cover damage caused by subcontractors?
Are soft costs covered under a Builder’s Risk Insurance policy?
How can I reduce the cost of Builder’s Risk Insurance for my project?
