Insuring a building involves several different policies, depending on whether it’s under construction or already built and occupied. Throughout its lifecycle, property owners’ exposures change. That’s why it’s critical to have the right policies in place throughout every stage – from Builder’s Risk coverage to an Installation Floater, a Commercial Property policy, and Business Interruption insurance. By aligning coverage with the building’s evolution, clients avoid dangerous gaps and protect their investments.
Builder’s Risk
The first step in the lifecycle begins from the ground up. Builder’s Risk coverage is designed to protect a structure while under construction or undergoing renovations. Builder’s Risk ensures that if the unexpected happens during construction, such as a fire, theft of materials, or vandalism, the costs of repair or replacement are covered. The policy can also include “soft costs” such as loan interest, permits, and architect fees, which often add up if a project is delayed.
Make sure construction costs, equipment, materials, soft costs, and code upgrade costs are all properly accounted for when purchasing a Builder’s Risk policy. Underinsuring during construction or failing to update property values can leave clients exposed. Also, review the policy period on your Builder’s Risk coverage, as projects often get delayed.
In addition, have clear definitions of triggers, including when construction is “completed” and what counts as occupancy.
Installation Floater
Along with Builder’s Risk insurance, many projects require an Installation Floater. This coverage protects materials, equipment, and systems while they’re in transit to the site, stored temporarily, or being installed. For example, this may include the delivery of HVAC units, custom windows waiting in a warehouse, or the installation of electrical systems. These high-value items can be lost, stolen, or damaged before the project is finished. An Installation Floater steps in where Builder’s Risk may not, ensuring the project’s critical components are protected until they’re fully in service.
Vacant Property
Between construction and full occupancy, many buildings may remain vacant, waiting for tenants, or preparing for sale. This stage presents unique risks, including vandalism, theft, fire, and undetected damage, which can escalate quickly when no one is on-site. Vacant Property coverage is required to protect the structure during transition periods and provide owners with peace of mind until the building is fully occupied and ready for Commercial Property insurance.
Commercial Property
Once construction is complete and the building is occupied, coverage needs to shift to a Commercial Property policy. This protects the finished structure itself, as well as its contents, tenant improvements, and equipment. Fire, storm damage, vandalism, and other hazards that can harm a completed building are covered under a Commercial Property policy.
For property owners, lenders, and tenants, Commercial Property insurance is the foundation of long-term risk management. It ensures that the significant investment in real estate can be repaired or rebuilt after a loss, keeping the property viable and maintaining its value.
Business Interruption
A serious loss can cause devastating financial fallout if operations are forced to shut down. That’s where Business Interruption (BI) coverage comes in. A BI policy covers lost income, ongoing expenses, and extra costs needed to resume operations after a covered property loss. For example, if a fire closes a retail building for several months, Business Interruption ensures the owner can continue to pay employees, cover fixed costs and operating expenses, and replace lost revenue until the doors reopen. Without it, even a temporary disruption can put long-term financial survival at risk.
About Seneca Insurance Company
Seneca Insurance Company can provide you with the Property coverage your clients require during a project, from the course of construction to vacant property and occupied.