The Builder’s Risk Insurance cover is a unique product that provides for the coverage of the damages of the building that are presently under construction at various events.

This policy covers damages caused by any of the following events:

  • Fire
  • The Wind (may be excluded in coastal areas)
  • Theft
  • Lightning
  • Explosion
  • Hails
  • Vehicles
  • Vandalism

There is limited coverage available in case the building collapses. Also, make sure to read the policy document carefully to be familiar with the relevant covers.

See: What is Property Insurance?

Add on covers for the Builder’s Risk Insurance Policy:

  • Clearing and removal of debris
  • Damage to surrounding property not forming part of the contract work.
  • Maintenance visit / extended maintenance cover to cover accidental loss or damage whilst carrying out any rectification during maintenance period and / or any amount incurred for rectification of such original defects or faults during construction.
  • Earthquake
  • Third party liability
  • Terrorism

Case for Builder’s Risk Insurance Cover

ABC Pvt. Ltd., a construction company, has started one of the projects to build a commercial complex in Gurgaon. Before going ahead with the construction, they decided to take up a Builder’s Risk Insurance Cover to cover all the perils that can cause damage during the construction.

The building was completed until five floors when a massive hailstorm struck the location. One of the walls which have recently been completed collapsed due to heavy rain and hail storm. This destruction caused damage of more than Rs. 80,000 and a portion of the building will need rebuilding.

Read More: What are the Requirements to purchase a Property Insurance Policy?

The collapse also caused damage to a car that did not belong to the builder. The builder had to shell out another Rs. 5000 for the repairs.

The builder has filed the claim with the insurance company.

The insurer has agreed to reimburse the amount of Rs. 80,000 but refused to share the third-party claim as the builder had not taken the add on cover for the same.

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