When something goes wrong during a construction project, the impacts can be significant. Most builder’s risk insurance policies provide coverage for specific types of expenses with set limits as to how much will be paid for each item. Although each policy is unique, here are some of the most common expenses that are often part of builder’s risk claims:
Preservation & Protection of Property
Costs incurred as a result of measures taken to preserve and protect the property (e.g. sandbags, plywood, labor, etc.) ahead of a loss occurring, such as a hurricane advancing towards the project site
Debris Removal & Cleanup
Costs incurred as a result of debris removal / cleanup efforts following a loss (e.g. dumpsters, hauling, internal and external labor, etc.)
Temporary Repairs
Costs to make temporary repairs at the project including all materials, equipment and labor costs
Costs to install protective measures to accommodate repair work
Property Damage
Costs to repair or replace damaged property at the construction project including all materials, equipment and labor costs
It is standard to also include contractual markups and fees on these expenses including overhead, profit, bond/insurance costs and project fees.
Storage Costs
Costs to store, transport or handle materials for use at the impacted project site that will now need to be stored longer as a result of construction being delayed while repairs are being made.
Architects & Engineers Fees
Costs to hire an architect or engineer to assist with the reconstruction or repair of damaged property.
Demolition & Increased Cost of Construction
Costs associated with upgrades/changes due to any codes or ordinances in effect at the time of the loss.
Costs associated with demolishing the undamaged portions of the project as a result of conditions caused by the loss.
Trees, Shrubs, Plants & Landscaping Costs
Costs for repairing or replacing landscaping damaged as a result of the event.
Costs for replacing damaged or destroyed plants, trees and shrubs.
Expediting Expenses
Overtime / premium labor costs to expedite work in order to make up any schedule delays as a result of the event
Expedited shipping costs of project materials
Expedited production costs for project materials
Extra Expenses
Extended general conditions / site costs including office rentals, equipment rentals, telecommunications, etc.
Additional project management costs
Increased materials costs due to inflation
Increased lump sum / flat fee proposals from subcontractors
Increased wage rates owed as a result of project delays due to damage (This is especially relevant with union labor when projects are extended)
Travel costs
Soft Costs
Interest/financing costs on funds used to finance the project/contract work
Real Estate taxes
Insurance premiums (e.g. the cost to extend a builder’s risk policy)
Delay in Opening / Delay in Startup (DSU)
Any loss of income/rents resulting from delay in opening caused by the physical damage to the project and the time needed to make repairs
These losses are typically subject to a waiting period (e.g. 30 days) before any coverage for losses will apply.
As with any loss, it pays to start tracking and organizing expenses as soon as possible. It helps to keep these categories in mind as you begin the claims process. At RCG, we work closely with owners, general contractors and other vendors to assist them with builder’s risk claims.
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