Options available to ensure that a construction project is properly insured during a period of increased weather risk

Part 3 of a 4 Part Series on Construction Weather Risk Management

By Gina Lozier and Jeffrey Wertman

This article was first published on Law360, A LexisNexis Company, and is republished here with permission of the authors.

Despite the limitations in a standard property insurance policy, a property owner has options available to ensure that a construction project is properly insured during a period of increased risk. Builder’s risk insurance is a specified type of property insurance designed to protect from fortuitous losses sustained during construction before a project is completed, accepted and delivered to the owner.[4] If a described loss occurs, the insurer under a builder’s risk policy generally pays the cost of removing debris, salvaging material and equipment, and repairing the damaged property.

Be aware of the various nuances within a builder’s risk policy that govern a time element loss.

An owner can also secure coverage for expediting expenses, extra expenses and loss of business income resulting from the direct physical damage and any delays caused by an event, such as a hurricane. An owner, however, should be aware of the various nuances within a builder’s risk policy that govern a time element loss. Time element losses refer to financial losses which are calculated, in part, based upon a period of time in which the insured’s business is adversely affected by the loss.[5]

[4] See Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 165 (Fla. 2003) (“Builder’s risk insurance is a type of property insurance coverage, not liability insurance or warranty coverage. The purpose of this type of insurance is to provide protection for fortuitous loss sustained during the construction of the building.”).

[5] See § 25A:5. First-party property insurance—Time element coverages, 2 Successful Partnering Between Inside and Outside Counsel § 25A:5.

Gina Clausen Lozier and Jeffrey S. Wertman are partners at Berger Singerman LLP.

This article is for general informational purposes and is not intended to be and should not be taken as legal advice.

More in the next blog post about weather decision support, weather safety and weather risk management…

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