Why Builders Risk Insurance Policy is Critical for Contractors & Property Owners?

Builders risk insurance policies, or Course of Construction Insurance, protects contractors and property owners from damages to a construction project caused by various perils such as theft, vandalism, fires, storms, and more. This construction project insurance policy also covers equipment, labor, project materials, and indirect costs. Not having this property insurance policy can result in a large financial burden for contractors and property owners, regardless of who is at fault.

This article will provide best practices for reporting claims on a builders risk insurance policy. It is important to follow these steps to ensure a successful outcome.

Step 1: Contact Your Broker Immediately

To report a claim, contact your broker as soon as possible, as they have designed the policy and have an intimate understanding of what the policy was designed to cover. Your broker will review the coverages bound, limits of your coverage, deductible, and exclusions to let you know if you have a claim worth filing. At FCA, we have an in-house claims reporting team who can analyze the situation and act quickly to protect your interests. Reporting an incident immediately is crucial as waiting too long can delay the process and may even result in a denial of coverage.

Step 2: Document the Damage

To support your claim, document the damage by taking photos or videos of the damaged property, equipment, or materials. Keep all receipts, invoices, and other documents related to the construction project, such as your construction contract. Providing detailed and accurate information will help your insurer assess the damage and determine the amount of coverage you are entitled to.

Step 3: Don’t Make Any Repairs or Changes Without Consulting Your Insurer

If your property or equipment has been damaged, it’s important not to make any repairs or changes without consulting your insurer. Making changes or repairs can alter the evidence of the damage, making it difficult for the insurer to assess the extent of the loss. In some cases, making unauthorized repairs may even result in a denial of coverage. Always consult with your insurer before taking any action.

Step 4: Consider Hiring a Professional

Hiring a professional may be necessary in some cases to help with your claim. This could include an independent third party or control adjuster who can navigate the claims process and negotiate with your insurer on your behalf. It’s important to work with a reputable and experienced professional who can provide valuable guidance and support.

Shawn Malik, a veteran adjuster with specialized builders risk experience of McLarens Canada notes “Typically, your insurers will retain consultants to assist them in the adjustment process such as: forensic engineers to determine the cause of the loss, cost consultants to work with you in assessing the scope of damages related to the loss, schedule consultants to assess the delay to the project due to the insured event and forensic accountants to assess loss of profits and soft costs due to an insured delay. The loss adjuster retained by the insurer will manage these consultants and be your point of contact to ensure proper flow of information, keep you apprised of status, assist you in preparing your claim to be submitted to the insurers etc. The process should be a cooperative approach to ensure you receive full recovery after a loss”. 

Step 5: Keep Track of Your Expenses

If your claim is approved, keep track of your expenses related to the damage to your construction project. This will help your insurer determine the amount of coverage you are entitled to.

In conclusion, builders risk insurance policies are essential for contractors, builders, and property owners who are undertaking construction projects. Identifying the need for a control adjuster with the proper experience and skillset should be done from the inception of the policy to handle any claims. Following these best practices for reporting claims on a builders risk insurance policy will ensure a smooth claims process and a successful outcome.

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