Whether you are merely remodeling or making structural changes to an existing building, or even taking on the task of developing a residential building from scratch, there are several important commercial property buildings insurance options to consider:
For example, a standard commercial building insurance policy will not adequately cover the construction operations. Standard package property policies for commercial buildings are designed for normal day-to-day leasing and ownership operations. There may be some exclusion within policies for commercial buildings where remodeling or construction is concerned.
When calculating the amount to insure on a Course of Construction policy, you should make sure that the coverage amount includes both the hard costs and soft costs of the project. Examples of hard costs include cost of materials, grading, excavation, concrete, framing, electrical, carpentry, roofing, and landscaping.
Soft costs include architectural, engineering, financing, and legal fees, and other pre- and post-construction expenses. Normally the builder and the lender are included as additional insureds under the policy.
Liability Insurance is required in any case
If you are hiring a general contractor, it is important to secure from them their liability certificate of insurance naming you as additional insured (you should do the same with all subcontractors, securing certificates of their liability insurance, naming you as additional insured). As the owner you may be exposed to uninsured losses if you simply rely on the contractor’s certificate of liability insurance naming them as additional insured.
For instance, there could be a cancellation of the contractor’s policy that you may not be aware of, or the contractor could have performed operations for which they were not insured, due to an exclusion or limitation within the contractor’s policies. If the contractor does not completely communicate with the insurance broker or the broker with the insurance company, the policy may not provide complete coverage, which in turn could land you in the middle of an uninsured claim.
Commercial property buildings insurance can cover everything from contractual obligations to environmental exposures. Speak to an agent to better understand the types of coverage you may require for your particular situation.