As a contractor, you fully realize that little or no new construction of real property is done without some type of residential construction insurance policy in New Jersey (or any other state for that matter). Banks, as well as other lenders, would never make loans for a construction project unless there was some type of insurance in place to protect their own interest.

You need a policy that protects your interests as well

You also have a lot at stake, including equipment, tools and materials while undertaking a construction job, due in part to the additional risk involved in working in open, and often hazardous, construction sites. Your exposures can also vary from one construction project to the next, and as the construction progresses as well. These are issues and concerns that are best alleviated by purchasing a builders risk policy.

As in other property policies, there are choices that you need to make as to available coverage options before construction (or for that matter, before a construction loan) is approved. Clearly the construction lenders as well as the developer and builder should do a lot of due diligence regarding the builders risk policy’s terms and conditions.

Another area of insurance coverage for buildings under construction or renovation that you need to consider is any costs associated with a loss that delays construction or possibly increases cost due to a covered loss under the builders risk policy. An example of this would be soft cost or delay in opening, which can be substantial, but coverage must be added to a builders risk form in order to be covered.

Any questions that you have about the unwritten limitations in an all risk policy also need to be discussed and understood. We suggest you speak to a qualified agent who can address your questions and concerns about New Jersey residential construction insurance.


photo credit: Giles Douglas cc