One more question on Liability/Builder's Risk Insurance.

You should bind a vacant building policy (inclusive of Liability and Property coverage) for closing. You can usually get these in 3 month increments. When you start construction, then you should bind the Builder’s Risk (property) and the Commercial Genral Liability (CGL) policy. The CGL should reflect a building under construction and not a typical occupied building policy….

yte

in Insurance 13 years and 3 months ago

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mc33433 | 13 years and 3 months ago

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One more question on these types of policies…. Should both of these policies begin immediately when we close? We are not going to inhabit the townhouse until after/end of construction. However, permits might take some time so construction won’t start immediately after closing. I wasn’t sure whether it’s worth paying for Builder’s Risk before we even begin to build! The agent I am working with seems to say we need both right away regardless of when construction starts. Is this right?

Erstwhile | 13 years and 3 months ago

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You are missing the point. A standard homeowners??? policy limits coverage to an owner occupied single or two-family primary res. Since you will not be occupying the building until after construction is complete, you need builders risk now to avoid a potential coverage problem. You’re welcome.

mc33433 | 13 years and 3 months ago

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Thanks… My lawyer had explained that that was what the Liability policy was for and that the Builders Risk was for when work starts… I see he was wrong.

Erstwhile | 13 years and 3 months ago

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Don’t rely on your lawyer for insurance advice! A standard homeowner’s liability policy contains a residency clause and will not cover losses that occur before you have moved into the building.

slopefarm | 13 years and 3 months ago

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Careful, though, sometimes a builder’s risk covers property damage but not liability to others. Ask your insurance broker which policy covers you if someone is injured on your property before you occupy the house. As I recall, when we went through this we had a single wraparound policy from Fireman’s Fund that covered everything and simply got repriced when the work was sufficiently done so that the builder’s risk premium vcould be dropped.

mc33433 | 13 years and 3 months ago

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Thanks very much to all of you for answering. Since these policies are quite pricy, I just wanted to confirm that were weren’t starting coverage when it was unnecessary. I had asked the bank, the insurance agency, and the lawyer and received a variety of answers! Thanks again.