While Constructing a Builder’s Risk Policy, Consider Soft Costs & Hard Costs

Every significant construction project needs a Builders Risk policy.

Sounds simple enough, but the process of procuring the correct Builders Risk policy starts with an understanding of the project costs, construction timeline, and imagining potential claim scenarios. When an insured purchases an insurance policy, there is an expectation if a loss occurs; the insurance company will make the insured whole again.  This only happens when a Builders Risk policy is designed correctly.  The key to policy design is understanding and identifying the values at risk and how those values align with the actual insurance policy definitions.

There are several major categories of “values” that need to be qualified and quantified to start the process:

1. Hard Costs;
2. Values-in-Place (if a renovation);
3. Soft Costs; and,
4. Delay in Start Up (“DSU”).