May 20, 2024

A report by the Congressional Research Service shows that between 2012 and 2021, the U.S. had to deal with over 60,000 wildfires annually. These in turn affected an average of 7.4 million acres every year. Thus, there can be no doubt that wildfires are a growing risk, and it’s especially going to affect people who own properties in these wildfire-prone areas. It’ll also affect those working on construction projects in these areas.

If you’re building in a wildfire-prone area, it’s important to get builders’ risk insurance. Your home or business may be damaged by the wildfires, but that doesn’t mean you’ll be on the hook for costly repairs. 

Builders’ risk insurance covers damage caused by fires and other calamities like floods, windstorms, and earthquakes. They also cover damages caused due to vandalization. However, for today, we’ll focus on the need to get builders’ risk insurance if you’re constructing in a wildfire-prone area.

You’ll be Covered If Your Property is Damaged in a Wildfire

If you’re building in a wildfire-prone area, it’s important to get builders’ risk liability insurance. If your property is damaged by a wildfire and the fire policy pays out, it will cover both the cost of repairing the damage and any residual costs. The latter can include things like lost income from not being able to work due to loss of equipment or resources.

You must get this insurance if you are planning on doing construction where there is a risk of wildfires. Because of this increased risk, most builders are required by their local governments to carry liability insurance policies before they start any construction project. These projects include both commercial and residential structures.

You Don’t Have to Spend Money Out of Your Pocket

Builders’ risk liability insurance provides protection for you, your business, and your employees. The insurance will pay for the cost of repairing any damage caused by fire, wind, or lightning to your building site. You don’t have to pay out of pocket like you would if you didn’t have this coverage.

The insurance company will reimburse you for all expenses related to the wildfire that damaged your property. This also includes equipment costs and labor costs associated with rebuilding after a wildfire.

The main reason why this type of coverage is so important is that wildfires are increasing in frequency and severity, especially across America’s West Coast states, creating an increased risk for homeowners living in those areas.

Builders’ risk liability insurance can help protect against major losses that could leave you vulnerable financially if you had no way to recover your losses. As a builder, losing your equipment and resources at a job site can mean that you can’t work elsewhere. To avoid that, you need to buy new equipment and resources, which you can do with the help of this risk policy.

You Can Have Coverage for Business Interruptions

Builders’ risk insurance covers lost revenue due to a covered peril. It does this by providing coverage for additional expenses and lost profits as a result of the covered peril.

You can also have coverage for business interruption losses that do not result from any covered peril but instead occur because of an unforeseeable event such as an act of nature or vandalism.

Builders’ risk insurance also covers flood, theft, and vandalism, among other things

Builders’ risk insurance covers wildfires, but it also covers floods, theft, and vandalism, among other things. The policy can cover damage to your property caused by a wildfire as well as business interruptions due to the wildfire.

Builders’ risk insurance policies often include a clause that excludes coverage for damage caused by an excluded peril. This is something that you can be grateful for because it’s not necessary that you’ll incur damages due to wildfire alone just because your project is in a wildfire-prone area. 

Flood, theft, and vandalism too can lead to losses in your business. The National Weather Service reported a total of 145 deaths in 2021 due to floods in different parts of the U.S. Not to mention the billions of dollars worth of damage caused due to these floods. That’s why it’s vital to get an insurance policy that covers all these risks.

Your Builders’ Risk Policy Can Include Debris Removal

Debris removal is a part of the total cost of your home, and it’s up to you whether or not you want to add this coverage. If your construction project is destroyed by a wildfire, the debris removal company will come in and remove everything from the site so that construction can begin again. They’ll also take care of any utilities that need to be reconnected and make sure all utility lines are buried underground so they don’t cause any further damage.

Between 2021 and 2022, wildfires across the U.S. caused damages worth over $11.2 billion. Thus, for those of you who have been building in a wildfire-prone area, it’s high time you got builders’ risk insurance, because you never know when your project might become a part of that statistic too. 

Getting the insurance, you can at least have the peace of mind that comes with knowing that your project is covered against the risk of damage from wildfires, as well as other unforeseen perils.

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