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Builders Risk Insurance: What It Covers and What It Doesn’t

Posted on by McGriff Williams in Blog |

Builders risk is one of the most misunderstood policies in the construction process. Many homeowners assume it’s a comprehensive policy that covers everything during a build. It isn’t. Builders risk is property insurance only, which does not include any liability. Knowing that distinction before you break ground could save you from serious financial challenges.

What exactly does Builders Risk cover?

Builders risk — also called course of construction insurance — protects the physical structure, materials on-site, and in some cases materials in transit, from the start of construction through completion or certificate of occupancy. Common covered perils include:

  • Fire, lightning, wind, and hail
  • Theft of building materials and vandalism
  • Explosion and sudden water damage
  • Soft costs (architect fees, loan interest, permit costs) when specifically added

Policies are typically written for 3, 6, 12 or 18-month terms. Premiums in Florida are generally fully earned at inception, no refund if the project finishes early. Extensions are available if the build runs long, but must be requested before the policy expires.

What does Builders Risk NOT cover?

  • Liability: No coverage for bodily injury or property damage claims against you as the property owner.
  • Faulty workmanship or defective materials: Damage from poor construction practices or substandard materials is excluded.
  • Worker theft: Theft by employees or workers on the job is generally not covered.
  • Flood: Requires a separate policy and is not automatically included.

An alternative option: Homeowners policy with under-construction endorsement

Some homeowners skip the standalone builders risk policy and instead purchase a homeowners policy with an under-construction endorsement. This extends property coverage to the structure during construction and — most importantly — can include the liability section of the homeowners policy. That makes it a potentially stronger option for homeowners who own the lot in their name. Confirm with your agent that liability is active and review coverage limits carefully.

Listen Up: If the land is in your name, you have a liability exposure!

Most homebuilders own the lot. That means you have a personal liability exposure that exists whether you have a builders risk policy or not. Consider this:

  • A delivery driver trips over construction debris on your lot.
  • A retaining wall fails during a rain event and damages a neighboring property.
  • Someone trespasses onto the site after hours and is injured.

In each case, a builders risk policy does nothing. You need a liability policy in place. Options include what we discussed above: a homeowners policy with an under-construction endorsement (which can include liability), a standalone vacant land or dwelling under construction liability endorsement, or confirming that a personal umbrella policy has qualifying underlying coverage. Your general contractor’s liability policy protects them — not you.

Talk to your agent before you break ground!

Whether you are the homeowner, builder, or real estate professional – make sure every phase of your project is properly covered. You could need a standalone builders risk policy, a homeowners under-construction endorsement, or guidance on closing a liability gap… either way, we can walk you through your options.

Can I Change My Coverage at Any Time?

Posted on by McGriff Williams in Blog |

Insurance needs can change over time, and understanding your policy’s flexibility is essential. One of the most common questions we hear from clients is, “Can I change my coverage at any time?” Whether you need to adjust your coverage levels, switch providers, or adapt your policy to fit new circumstances, we’re here to help. In this guide, we’ll walk you through the key considerations, options, and steps to ensure any changes to your coverage are seamless and in your best interest.

Understanding Insurance Policies

Before we delve into how to change your coverage, it’s crucial to understand how insurance policies work. An insurance policy is a contract between you and your insurer that outlines the coverage provided, the terms and conditions, and the premiums you are required to pay. Insurance policies can vary significantly based on the type of coverage (e.g., auto, home, health), the provider, and the specific terms you agree to when purchasing your policy.

Key Components of an Insurance Policy

  1. Coverage Limits: This refers to the maximum amount your insurer will pay for a covered loss. Each type of coverage has its own limits.
  2. Deductibles: The deductible is the amount you must pay out-of-pocket before your insurance kicks in. Higher deductibles usually mean lower premiums, but they can also increase your financial risk.
  3. Premiums: This is the amount you pay for your insurance coverage, typically on a monthly or annual basis. Your premium can fluctuate based on factors like claims history, coverage changes, and market conditions.
  4. Exclusions: These are specific situations or conditions that are not covered by your policy. Understanding exclusions is vital for making informed decisions about your coverage.

When Can You Change Your Coverage?

Mid-Term Adjustments

Most insurance policies allow for mid-term adjustments, meaning you can change your coverage levels or types at any point during the policy term. This flexibility can be beneficial for several reasons:

  • Life Changes: Major life events, such as marriage, having a child, or purchasing a new home, may necessitate changes in your coverage.
  • Financial Adjustments: If your financial situation changes—whether you experience a windfall or face financial hardship—you may want to increase or decrease your coverage.
  • Policy Review: Regularly reviewing your policy can reveal gaps in coverage or opportunities for savings. If you find that your current coverage no longer meets your needs, you can adjust it accordingly.

Renewal Period

When your insurance policy is nearing its renewal date, it’s an excellent opportunity to reassess your coverage. During the renewal process, you can:

  • Adjust Coverage Levels: You can modify your coverage limits based on your current needs.
  • Switch Providers: If you find a better rate or coverage option with another provider, you can switch at renewal time.
  • Add or Remove Coverage: You can opt to add additional coverage options or remove unnecessary ones.

How to Change Your Coverage

If you decide that you want to change your coverage, follow these steps to ensure a smooth process:

  1. Review Your Current Policy

Before making any changes, take the time to review your current policy. Understand what coverage you currently have, including limits, deductibles, and exclusions. Identify areas where you may need additional coverage or where you might be over-insured.

  1. Assess Your Needs

Consider your current situation and how it may have changed since you first purchased your policy. Ask yourself the following questions:

  • Have there been any major life events that require a change in coverage?
  • Are you comfortable with your current deductibles and premiums?
  • Do you have enough coverage to protect your assets adequately?
  1. Contact Your Insurance Agent

Your insurance agent is your best resource when it comes to making changes to your coverage. They can provide you with insights into your current policy and help you navigate the options available to you. When speaking with your agent, be clear about your needs and any specific changes you want to make.

  1. Submit Your Changes

Once you’ve decided on the adjustments you want to make, submit your changes to your insurance provider. This can often be done over the phone or through your insurer’s online platform. Ensure you receive confirmation of the changes made to your policy.

  1. Review the New Terms

After your changes have been made, carefully review the new policy terms. Check that the adjustments align with your expectations and that you understand any new exclusions or changes in premiums. This is also the time to ask your agent any lingering questions you may have.

Potential Limitations and Considerations

While you generally have the flexibility to change your coverage, there are some limitations and considerations to keep in mind:

  1. Timing Matters

Although you can change your coverage at any time, certain changes may be more effective at specific times. For example, if you’re looking to switch providers, doing so at renewal time may be easier and more beneficial than switching mid-term.

  1. Penalties and Fees

In some cases, changing your coverage may incur penalties or fees, especially if you are canceling a policy before its term ends. Always inquire about any potential costs associated with making changes to your policy.

  1. Underwriting Process

If you switch providers or increase your coverage significantly, your new insurer may require a new underwriting process. This could involve a review of your claims history, credit score, and other factors that may affect your premiums.

  1. State Regulations

Insurance regulations vary by state, impacting what changes you can make and when. Familiarize yourself with your state’s regulations to ensure compliance.

Common Reasons for Changing Coverage

Understanding the common reasons for changing coverage can help you assess your own situation. Here are some of the most common scenarios that prompt clients to adjust their policies:

Life Events

Major life changes often necessitate a review of your insurance coverage. This includes:

  • Marriage or Divorce: These events can impact your coverage needs, especially regarding auto and home insurance.
  • Having a Child: New parents may want to increase their life insurance coverage or add their child to their health insurance plan.
  • Purchasing a Home: Homeownership brings new responsibilities and potential liabilities, making it essential to review your homeowner’s insurance.

Financial Changes

Your financial situation can significantly impact your insurance needs:

  • Job Changes: A change in employment may affect your income and, subsequently, your ability to pay premiums.
  • Debt Management: If you’ve taken on more debt or paid off significant loans, you may need to adjust your coverage to reflect your current financial situation.

Changes in Assets

If you acquire new valuable assets or dispose of old ones, it’s wise to review your coverage. For instance, purchasing a new car or valuable collectibles may require additional insurance.

Market Conditions

Insurance premiums can fluctuate based on market conditions. If you find that your current provider’s rates rise significantly, it may be time to shop around and consider alternatives.

Benefits of Changing Your Coverage

Adjusting your insurance coverage can provide several benefits, including:

  1. Better Protection

By reviewing and changing your coverage, you can ensure that you have adequate protection for your current assets and liabilities. This can provide peace of mind knowing that you are safeguarded against unexpected events.

  1. Cost Savings

Changing your coverage can lead to cost savings, whether through lower premiums or more efficient policies. Shopping around for better rates can help you save money while maintaining or improving your coverage.

  1. Tailored Coverage

As your life changes, so do your insurance needs. Adjusting your coverage allows you to tailor your policy to better fit your current situation, ensuring that you have the right protection in place.

Insurance needs can change over time. Whether you’re looking to increase coverage, switch providers, or adjust your policy due to life changes, we’re here to help. We provide expert guidance to ensure you have the right protection in place, no matter your situation. Regularly reviewing your policy and consulting with an expert can help you navigate the complexities of insurance with confidence.

By staying informed about your insurance options, you can make proactive decisions that protect your assets and meet your evolving needs. Remember, insurance is not a one-size-fits-all solution; it’s essential to tailor it to your unique situation for optimal protection. Contact us to discuss your options and ensure your coverage aligns with your current needs.

How will the new heat protection protocols in Florida impact your business?

Posted on by McGriff Williams in Blog |

Just in time for a hot summer that’s quickly approaching, Governor DeSantis signed into law the Employment Regulations Bill 433. Part of this bill prohibits local governments, at the city and county levels, from having their own heat protection guidelines – in an effort for everyone in the state to abide by the same rules.

There has been controversy over this bill, since it’s widely supported by business groups across the state but also strongly opposed by worker advocacy groups. It became an issue in need of change and clarity after a situation with the Miami-Dade County Commission. They considered an ordinance that would require construction and agricultural firms to ensure access to water and 10-minute shade breaks every two hours if the heat index was over 95 degrees.

The basis of this bill is to keep guidelines consistent across the state but also because it is believed that OSHA (Occupational Safety and Health Administration) has developed the best practices to follow over the years.

Since 2010, heat related deaths have risen 95% so the effort to streamline these protocols maintains the same goal… to prevent heat related illness at all costs and keep all workers and Florida residents safe.

If you’re a business owner or administrator and don’t currently have heat illness prevention as part of your safety plan, it is recommended and more information can be found here.

Trade Tip: How to Hire & Retain the Right People in Construction

Posted on by McGriff Williams in Blog, Business Insurance, Human Resources |

It’s no secret that in the construction industry, one of the biggest battles business owners face is finding good people and keeping them. In exploring efforts that could enhance the hiring process to be sure you’re getting the right people in the right seat from the get go, we found the following tips:

HIRING NEW FOLKS:
– Lean on local or close by schools and industry specific programs. This is a great resource because students graduate and immediately look for employment, oftentimes with the intent to stay in the community where they already have roots. A lot of times, this can start early on at the intern level, which gives a huge opportunity to mentor and mold them to become a more long-term member of your team.
– Get plugged in to apprenticeship programs that are gaining huge popularity and admitting more students constantly. These teach the perfect balance of employment and academics in certain trades so that students can learn and work at the same time.
– Consider pre-employment physicals or health screenings in addition to the drug testing, background checks, etc that you already have in your hiring process. This can paint a picture of the prospective employee’s overall health and well-being so you can be sure you’re investing in a long-term relationship and a reliable player for your team.

RETAINING THE GOOD ONES:
– Focus on culture and how your team feels over what they’re being paid. You may think they care more about their paycheck and yes, benefits are important too, but you might be surprised at how much your team culture and morale means to them. That may be flexible schedules, employee appreciation efforts, team building events or performance-based competitions and incentives.
– Emphasize and encourage training. A team that never stops learning together will always succeed. Providing them with courses and material that can make them better and help your team grow together is proof that you want them around for the long haul.
– Be transparent and celebrate the small wins. As imperative as it is to be open about and share financial information, the state of the company and growth goals, it also speaks volumes to celebrate and show appreciation for the daily strides in the right direction. The construction industry in general can easily get hung up on measuring success by landing the monster jobs but the little ones count to and as long as you’re transparent and honest, your team will buy in, feel like a piece of the puzzle and genuinely care.
– Stay on top of technology and provide your employees what they need to be efficient, safe and profitable. There are many apps and tools out there that could make jobs run more smoothly and most of the time, it’s worth the relatively small upfront cost to invest in those. Making your employees feel as if they have support in that regard alone goes a long way.
–  Show how much you care. This speaks for itself but is incredibly important and should be a top priority.

It seems to save everyone time, effort, money and headache to get the right people in the right seat early on in the game. Then keep them happy and well taken care of for a long-term relationship of them serving your clients while also fostering a culture of a work family.

 

If you’ve never considered your income an actual asset worth protecting, now is the time!

Posted on by McGriff Williams in Blog |

Most people think their biggest asset or need for protection is their home, since that’s typically the largest financial obligation or equity that they have. It’s often times overseen that your income is extremely worthy of protecting too.

Imagine not getting a paycheck for a month maybe you have an emergency fund or savings to cover all of the bills temporarily. What about six months? Or a year? Things could get tight really quickly and some Americans are unfortunately experiencing this first hand right now with our current pandemic.

Disability insurance comes in to help in the event of injury or illness causing the insured to not be able to work, or even only able to work a reduced number of hours or abilities. Unlike the limited disability coverage that some employers offer, a personal disability insurance policy would follow the insured wherever they go in life and wouldn’t be lost if their job was ever in jeopardy (like health and retirement benefits would be).

The premium of this coverage varies based on income and overall health of the individual. There are typically medical exams but some companies are currently waiving those for up to $10,000/month coverage. And these policies can usually be bound rather rapidly so there aren’t long waiting periods.

It seems like a no-brainer, especially for high income earners, in the work force today. However, we find that many people just aren’t even aware of this type of coverage which is why we use Disability Insurance Awareness month in May of every year as an opportunity to share this information.

There are a lot of moving parts with disability insurance causing things to vary from person to person so please reach out anytime you have questions on what this might look like for you and your situation. Nick Deas can be reached at nick@mcgriffwilliams.com or (352)371-7977.