Policy Period: Commencement of Coverage

        Builder’s Risk Coverage: Understanding the Policy Period


Commencement of Coverage: Builder’s Risk policies provide coverage for property in the course of construction, renovation or repair. But at what point does construction renovation or repair begin?

     • Typically, contracts require that insurance be provided for the duration of the
     contract period. This means that the policy inception date would be
     the date the contracts are signed.

     • The lender may also specify the inception date.

     • However, be sure to review insurance policy provisions to determine whether
     there are restrictions on when coverage begins. Policies may contain clauses
     that state coverage begins when construction commences or that the
     insurance company will pay for losses at the time you become legally
     responsible for the covered property, either on or after the effective date. Prior to
     any site preparation, demolition, or delivery of materials or equipment, review the
     policy to ensure there are no restrictions on coverage inception.

Construction projects, regardless of their size, can present complex insurance issues. Are you confused about your exposures and policy options? If so, it’s no surprise—there are no standard builder’s risk policy forms covering these types of risks. To help you limit your exposure, here are some helpful builder’s risk policy basics.