What Is Homeowners Insurance?
Homeowners insurance is relatively simple. It covers damages that may occur to your home and to your assets in the home. This type of insurance also covers liability coverage in case of accidents on the property.
Here is what you usually find coverage for when you buy a homeowners policy:
- Liability insurance
- Exterior damage coverage
- Interior damage coverage
- Loss or damage of personal belongings
- Injury sustained on property coverage
All of these are important coverages to have, and no doubt, you need them for any home. However, if you’re in the process of rebuilding your home or starting for the first time, it isn’t going to be enough.
What Is Builders Insurance?
You take out homebuilders insurance for the duration of your build. Generally, your policy will end as soon as your construction project ends. In fact, your insurance company will usually base your rates on your estimated completion time. In addition to insuring your policies, builders risk insurance also insures the contractors working for you. Keep in mind that construction can be dangerous. You need to protect your subcontractors, engineers, and architects.
There are generally two types of policies offered. The first is a specified peril policy. This policy covers the specific risks and incidents that occur on construction sites but does not cover any natural disasters or surrounding properties. An all-risk policy, on the other hand, covers a wide range of damages. If there is a natural disaster, you’re covered. During long-term projects, this is the best option, because you never know what might happen.
Do You Need Home Builders Insurance?
What if you’re remodeling or rebuilding on a current property, rather than starting a new construction site? There is a misconception that you only qualify for builders risk if you are starting on a new project. This isn’t true. On your established properties, you probably already have homeowners insurance, but this doesn’t mean that you should hold yourself back from looking into the specific risks and coverages involved with a rebuild.
While every home needs a homeowners policy, these coverages will not always help you in the case of new construction. After all, there are different risks involved when you’re undergoing a new build. You have workers on site and deal with situations that aren’t the usual day-to-day risks that homeowners usually have. If you don’t have home builders insurance, and something happens on your property, you may not have the necessary protection without the right coverage. This is why it’s important that you know the difference between the two types of insurance.
