If you are building a home in California, part of the process may involve figuring out how to stay within your budget. You may try to decide whether builders risk insurance is a necessary expense. In many cases, it depends on the circumstances and specifics of your building project. While a builders risk insurance policy may be extremely important when you are building a home from the ground up, you may not need this type of coverage for a small home renovation project, such as remodeling your kitchen.
According to the International Risk Management Institute, Inc., a builders risk insurance policy generally covers property during the course of construction. If you decide to purchase this type of policy, the terms of the coverage may vary slightly between different insurance providers. However, most policies cover damage to your property from fire or wind. It is also common to provide coverage against the theft of building materials and tools. Some policies may only cover risks that exist on your property and building site. If your project requires having building materials shipped to you from other locations, you may be able to find a policy that covers items during storage and transit.
An important part of purchasing a builders insurance policy is deciding on the coverage limits. Generally, a provider may use the completed value of your project as the coverage limit. You may also use information from your estimated construction budget to determine how much coverage you need. Most builders risk policies last for a specified amount of time. If you are renovating, you may be able to find policies for three or six months. New construction may require coverage for a longer period of time, such as a year.
This information on builders risk insurance is intended for educational purposes and should not be interpreted as legal advice.