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During the home construction process, unexpected events could occur and cause financial losses. Although the issues can be minimal, it’s best to have coverage in the event these risks occur. Continue reading to learn more about obtaining homeowners insurance while the property is under construction and the advantages that come with it.
Collateral Protection
Safeguarding yourself against potential damage is the main reason for homeowners insurance during the construction process. Weather damage is one of the top risks, which includes water problems like flooding, heavy rain, and ice pellets. Fires, theft, and vandalism are other issues that could occur while the home is being constructed.
The collateral protection should apply to damaged foundations of the property as well as the walls and interiors of the home while it’s being constructed.
Required by Lender
Builder’s risk insurance is generally required before a financial lender approves funding for a new home. The company does this to protect its investment against property damage, destruction, and more. The objective is to retrieve the approved loan amount if these problems occur.
If the lender needs to repair and replace, the homeowners insurance policy can cover those expenses and prevent the lender from losing money. Foreclosure is another possibility, but when buyers meet the insurance stipulations, lenders can regain construction fees and other costs on the property.
To learn more about home insurance policies that meet your current lender’s requirements, you should contact qualified insurance providers. These professionals can go over their options, explaining what you should do to not only meet those standards and receive financing for the project but also to learn the coverage options that protect you and your family.
Liability Protection
A construction company will purchase general liability coverage to protect multiple factors— significantly, their workers. In the event of an accident that leads to injuries, liability protection can apply to medical costs, workers’ compensation, and other essentials.
This coverage will also safeguard a company from third-party accidents. For example, if a pedestrian walks by the home and suffers an accident or injury due to the construction site or tools, the general liability insurance policy should apply to the individual’s medical costs and various legal fees, such as legal settlements.
Liability protection could also cover damage to another individual’s property. For instance, if a construction worker accidentally drops equipment on a neighbor’s premises, causing injury or property damage, the coverage could apply to this.
Coverage Duration
Builder’s risk insurance during the construction process isn’t the same as property coverage. Once the project is complete, this insurance is typically terminated. The objective is to ensure coverage remains for damage or loss to the actual home, including structure materials.
By contacting an insurance company, you can go over the coverage duration process to secure long-term protection for your assets after the construction job is complete. The peace of mind with this coverage allows you to enjoy your new home and build long-lasting memories.
Make sure to check with your insurance agent so you know exactly what’s covered while your home is being built. If you need reliable, affordable homeowners insurance, call on the experienced, trustworthy professionals at Altra Insurance Services. We can also provide you with renters, commercial, and car insurance. San Diego homeowners can learn more about our high-quality personal service by calling us today.