Builders Risk coverage provides building coverage from the start of the building project to the day the building is complete and ready for occupancy (and sometimes longer). Builders risk can be used for both new construction and renovation projects. Coverage may be purchased by the owner of the building for the single project or may be purchased by a contractor for multiple projects.
A commonly targeted material used in many construction projects is copper, due to its high recycling value. According to the United States Department of Energy, copper wire theft costs the public an estimated $1 billion per year and construction sites are a prime target. If copper is stored on a construction site for a project covered by a Builder’s Risk Insurance Policy, it is typically covered for theft.
For Example: A builder’s risk insurance policy had been purchased for a construction project for an addition to an existing medical treatment facility. While the electrical subcontractor was in the process of roughing in the mechanical and electrical installation, a theft of a large amount of copper wire and pipe occurred. This was despite the fact that the project site was fenced in and the front gate locked after work hours. Not only did the thieves take the copper wire that was being stored on the construction site, they also removed copper that had already been installed.
The owner filed a claim on their builders risk insurance policy. The policy covers loss or damage that is the result of theft to the following types of property:
- Machinery and fixtures
- Building service equipment
- Building materials and supplies of the insured to be used in construction
The third type of covered property applies in this situation – the copper wire and pipe was intended to become a permanent part of the property. It is also important to note that their materials, although not inside the premises, were within 100 feet, a requirement in the owner’s builders risk insurance policy in order for the property to be covered.
Because of the owner’s builders risk insurance policy they were able to recover from the insurance carrier the cost to replace the property with materials of like kind and quality. The claim was settled for $40,000 with the insured paying a $5,000 deductible.