I is for insurance

Posted a few weeks ago by a builder friend of ours out of the area. I thought it beared repeating.

Question: What happens if during the building of your new home, there is a fire? You have closed on your construction loan and the bank has made several dispersement payments for the construction costs. You now have a mortgage but no home, who covers the damages?

Answer: Your Builder’s Risk Insurance Policy.

Most banks require that a Builder’s Risk policy be in place at the initial closing of a construction loan. They want to ensure that their interests (the money loaned for the project) are insured in the event of a catastrophic loss during the construction of a new home. Builder’s Risk Insurance is a physical damage policy that covers all phases of construction. From the moment equipment arrives on site to occupancy of the home. Some of the losses this insurance covers include theft and vandalism, water, fire and weather damage. This coverage is for the interests of the General Contractor, sub-contractors, bank and homeowner. Each policy is project specific and should be reviewed between the General Contractor and homeowner.

Does your G.C. have Builder’s Risk Insurance?

For more information, check out these links:

http://www.buildersriskinsurancehelp.com

http://www.ehow.com/how_2049312_prepare-builders-risk-insurance-checklist.html