Insurance during Construction?
TammyinColorado
| Posted in Construction Techniques on
Looking for advice on what kind of insurance to get during construction. We’re building the house ourselves and have homeowners/personal prop insurance on our main home about two hours away (same state). We now have a garage structure (separate structure), and the house started getting framed this week (so the $$ of invested time/materials are starting to be noteworthy).
Do I just need Fire and Dwelling? Is that sufficient for any liability for injuries during construction (we use “day labor” sometimes when needed, or friends/family) or if someone wanders on the property?
Just want to be aware of what we should be aware of!
Thanks in advance!
Replies
Talk to an insurance agent. He'll tell you what your policy covers and doesn't cover. Then he'll advise you what you should be covered for and you can decide how much coverage to purchase.
The cost difference between different levels of coverage isn't that much, so going with more coverage is generally wiser.
A couple who are good friends were building a new house which was nearly complete (drywall complete) when it burned to the ground this spring. The basement walls were probably ok but questionable, and the floor was fine but had radiant floor heat, so might have had hidden damage. Their insurance covered everything, including tearing down the foundation walls and the basement slab. All that they left was the footing. In a few weeks they were rebuilding.
When we built we had our agent issue a "builder's risk" policy for the constuction phase -then convert over to a full homeowners policy once it was turn key.
Much like a construction loan can be rolled into a regular mortgauge once the house is complete.
What Wayne said.
When building our home, I believe it was called course of construction insurance.
DO NOT scrimp on coverage. I had a friend i hired off hours to do some siding, a roof jack popped and he slid 15' to the ground, cutting his hand on some flashing. $600 emergency room bill. insurance paid it. Come to think of it, it was about the same amount as I paid for the policy. If he'd been the litigious type it could have gotten painful.
Good luck on your build.
D.
I carry whats called builders risk, which is based on the value of the project. General liabilty for accidents (ie: covers you when the noisy neighbor falls off the porch etc.) Inland marine which covers my equipment.
If your financing this project thru a lender, Iam surprised that this was not brought up.
You say that you hire day labor and friends, quess what if they get hurt while working on your property, and you don't or they haven't any comp. ins. your on the hook. You could end up building a very nice house for someone else.
I would advise that you get with a ins. agent asap and get your azz covered. Your exposure at this point in the project is prime for you to be paying somebody for the rest of your adult life.
builders risk insurance can be bought, but check w homeowner's u have now and see if they will tag on another homeoner policy or even a separate one for the new house w a rider for new construction i did this, asking the agent about it by chance he had tears in hiz eyes as he wrote the homeowner/new construction policy at half the cost of the builkder risk he quoted me
Exactly. I was able to purchase a HO policy once the footings were poured. Allstate, no less.PAHS Designer/Builder- Bury it!
What others have already said,
A builders risk policy is what you need, and if you hire day labors you need to cover them with a separate workers comp policy unless the labor agency covers them.
Friends and relatives that offer to help gratis do not need to be covered in KY, but it is still a good idea to up your general liability just in case. Friends that get hurt while helping you can be more costly than hired help.
Building your own home is a gratifying and rewarding experience. Having someone you know and/or love get hurt while helping you can ruin you, emotionally and financially.
Dave
"Friends and relatives that offer to help gratis do not need to be covered in KY, but it is still a good idea to up your general liability just in case. Friends that get hurt while helping you can be more costly than hired help."FWIW, when I was a church treasurer we had a rider for "volunter" workers comp.Of course this was a very church specific type of policy.
When I built I got a course of construction rider on my homeowner's for very little money. My agent had me start with a low coverage amount and I called him at various milestones to increase the coverage as I had more at risk. If you're not the type to remember to call every couple of months, just get the full coverage to start with.
I'm starting on a vacation cabin now so I'll have to see how the new insurance company deals with it. The old company pulled out of my state for some reason.
Thanks for the advice - it's still perplexing to me and I'm hoping to bounce this off you all for any additional feedback.
Contacted my agent - they indicated our current liability coverage extended to any location including our building property and it doesn't have to be specifically named in our policy. We have to be responsible/at fault for the loss/accident.
They set me up with an agent from their commercial insurance division. I have a Builder's Risk policy now which includes structure and materials coverage (no liability) and is a one-shot (renew each year). This seems reasonable to me because we're on the slow build process (self-funding as funds allow) so the insured value can keep up with what we have in the property (doesn't cover labor cost?)
But they insisted if we're having people do any work on the property whether or not straight hires or family/friends, we should also have worker's comp and there is no other insurance that will satisfy minimizing risk.
If I have my son helping, how would any bodily injury or loss risk be minimized? What if my brother is helping and working off a loan from me?
Thoughts? Advice?
Tammy
I would send a note to the insurance co and tell them the specif location of the new house, and what work is happening. I would not rely on their statement that it does not have to be named in the policy.
You need to have a written agreement with your brother stating the dollar amount per hour that is credited to his debt.
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Whether it is writen or not, she is hiring her brother to do work on the house and would be liable for any WC claims.
The only people that I can exempt from WC is immediate family, (ie: son daughter wife) might just be the state that I live in. If I hire my brother in law I'am liable for any claims if he is not insured.
Have your brother act as a sub and carry liabilty ins.
FYI, here's what I settled on:
Learned our umbrella liability policy extends to anywhere if we're sued (doesn't have to be the named properties)
Got the Certificate of Insurance from the contractor on site (with us named on the certificate).
Got Builder's risk insurance for the buildings and materials - I had to talk the agent into only insuring for the amount I wanted (she wanted to insure for the "final value" - crazy!) - it has to be renewed annually anyway, so I'll adjust the amounts as needed (since we're on the slow build plan - self financing - this is pretty easy to manage). It includes some liability as well.
Lastly, I bit the bullet and got Workers Comp insurance. Not cheap, but I figured it's worth it since the two guys working don't have insurance (they're not professional contractors, but skilled workers) and it would be a major tragedy in each of their families if either of them lost this particular skill.
I figured it's all worth the learning even if after a year we learn we didn't have to do it this way. Thanks to you all for the advice and relating your experiences!
Tammy