Fixer-uppers have become all the rage lately, with more homeowners remodeling older homes than ever before. Whether you purchase a remodeling project and plan to live in it or want to sell it after renovation, it is essential that you carry builders risk insurance coverage.
Available from any builders risk insurance company, this type of policy provides the extra coverage your project needs to ensure complete protection throughout renovation. Read below why a builder’s risk policy from a local builders risk insurance agency is better than having a standard homeowners policy.
Fixer-Uppers Are Different Than Regular Homes
Fixer-uppers present different insurance risks than a finished home where you live. A builders risk insurance policy is often recommended based on these other risks. You may live in the home while remodeling or it may be vacant during renovation. Remodeling work could include anything from simple interior upgrades to extensive work or even rebuilding the entire structure.
Your project may be financed by a bank loan in addition to your mortgage, which adds even more risk. This is activity beyond the usual that is involved in redecorating and light remodeling of a lived-in home. The best way to protect this kind of investment is with a policy from a builders risk insurance company.
What Does Builders Risk Insurance Cover?
A policy written by a builders risk insurance agency covers a fixer-upper home in the same way it does a commercial building or any other construction project. The policy is written based on the actual cash value (ACV) of the home minus depreciation plus the cost of renovations. Any new building materials and renovation items such as windows, doors, flooring, appliances, etc. are covered at purchase price plus the cost of installation.
Materials delivered to the home are covered upon arrival.If any of these items or entire house are lost due to a covered peril, it will be replaced as outlined in the policy. Just make sure you keep all receipts and records of the remodeling project.
Higher Levels of Liability Coverage
Builders risk insurance provides higher levels of liability coverage than a basic homeowners policy. This is important as hired contractors and others will be working on the home, increasing the risk that someone may be injured. A policy from a builders risk insurance company is essential if you will oversee the project, act as the general contractor, and hire subcontractors to perform the actual work. It is particularly significant if the subcontractors do not have their own liability insurance.
Policies from a builders risk insurance agency also cover certain “soft costs” associated with your fixer-upper project. These costs may include things such as construction loan interest, property tax assessments, architectural consulting fees, legal fees, license and permit fees, and certain others.
Before you start that fixer-upper project, be sure your investment in property, materials, and time is well-protected with builders risk insurance. Should anything happen while your project is underway, the loss will be covered. This type of policy purchased through a local builders risk insurance company will ensure you can continue working until the house is completed.
Rather than taking the chance of losing everything invested in the renovation, discuss your project with a builders risk insurance agency to get this extremely important coverage in place!