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By Robert on 10/17/2003


Here I am, two weeks away from closing. Thru BuildMax and IndyMac. BuildMax told me to get a "builders risk" policy a few weeks ago, I got that and now IndyMac gives me a sheet saying I'll need a "General Liability" policy. "No big deal" I think, until I find that getting one is near imposssible!! I'm stuck in the "We can't give you one unless you're a licensed GC" trip. Has anyone overcome this? What company? What approach? I'm building in North Carolina. I can't believe BuildMax didn't give me a heads-up on this issue as from here it looks like a common hang-up.
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By Jim on 11/27/2003


We are about to start construction of a house and barn and find that our "paper contractor" who is terrific, 32 years of experience, no claims, etc. can't get insurance. I am considering becoming owner-builder and using him as supervisor if I can get suitable liability insurance to guard against a "big" personal injury claim. Any ideas who might write a policy like this?
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By Sri in Lawrenceville, NJ on 1/9/2004


My mortgage company wants me to get General Liability insurance for $500K for each occurrence and $1 million aggregate. I am finding this insurance coverage impossible to get or very high premiums; upwards of $16,000 per year. I need help from all the experts here who must have gone through this hurdle. Thank you.
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By Brian in Los Angeles, CA on 1/12/2004


We're in the same situation... trying to get general liability coverage. Our current broker, Mercury Casualty, won't cover us during remodeling. Any suggestions of whom to contact would be greatly appreciated.

Brian
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By John in Port Republic, MD on 1/23/2004


Alright folks! He is the deal with IndyMac Bank and the insurance. Let me qualify this by saying that I am working with IndyMac and I am only required to get Builder's Risk policy that shows those coverages of $300,000/$1,000,000. Only a GC can get General Liability Insurance. The insurance you need is basically a homeowners policy for builders. If you don't want to take ANY chances, depending on the cost, cover yourself with workmen's comp insurance. It covers YOU in the event anyone gets hurt on YOUR work site. I am using State Farm insurance. They give me the declarations page and that will satisfy the requirement!
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By Teri in FL on 3/4/2004


Hi Robert - Just wondering - we are having the same problem - did you find an insurance company that would provide coverage for you? Please let me know.

Thanks,

Teri
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By Larry in Sacramento, CA on 3/5/2004


Brian, did you get any information? I am also in California -- northern California. I am ready to start digging the footings, and I have run up against this problem. I am desperate! I suspect that California will be more difficult even than other states.

Larry
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By Nancy in Tampa, FL on 3/29/2004


If you are only two weeks away from closing (finish of your house) why would you need Builders Risk at this point? That's something that should have been purchased at the start of building your house. I would question why they are asking for it now.
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By Nancy in Tampa, FL on 3/29/2004


Most insurance companies will write Builders Risk Insurance. We are using State Farm. Re your contractor saying he can't get insurance, I would question that. In Fla where we are, the contractors get it via a state pool.

If you do get the Builder's Risk policy, make sure you get a certification of insurance on your subs and their employees. Make sure it states "all" employees of this company and add a paragraph that if he employs a person not listed on his policy he takes full responsibility should something happen. Same thing for this contractor who says he can't get insurance.

Once you have this signed document along with a statement of their insurance you can contact his agent/insurance company to verify the policy is paid and in force and ask that you be notified should there be a lapse in the policy. We are going to get an umbrella policy during the build period to cover us just in case. Money well spent. Our Builders Risk will be $1,600, the same as what the Homeowners will cost once the house is finished. Not sure about the umbrella policy but where we used to live we had one and it was only $350 per year. Good Luck!


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By Larry in Sacramento, CA on 4/2/2004


I have found someone who can help with course of construction insurance. She is very helpful and works hard to find what you need. Sharon Hasemeyer, Interwest Insurance Services: email, shasemeyer@iwins.com phone, 916.609.8372. She obtained a one-year builders risk policy for me that does not require a GC.

Larry
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By DeAnn in Sheridan, AR on 5/19/2004


Larry, were you happy with her service? Can she help obtain BRI outside of CA? We are having a problem with our present insurance company, USAA, despite the fact that my husband has 22 years of construction management experience with the USAF.
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By Nancy in Tampa, FL on 5/19/2004


Try State Farm... We got ours through them. Once the house is finished, it converts to a Homeowners Policy. We've been with them eons, but it's worth a try. Only cost $1,500 for the year. Not sure of all the coverage, but my husband took care of it and he was satisfied. We always make sure that we get a copy of the sub's Workmens' Comp and Personal Liability. You can also go directly to their agent and request that you be notified if their insurance should be cancelled or expires.

Many of the subs down here hire help though an employment agency. The employment agency then in turn provides the Workmens' Comp on the workers. Cheaper for the sub. They will issue you a copy of the Sub's WC and names of who is covered under this policy. So we feel pretty secure against lawsuits.


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By Chris in Los Angeles, CA on 8/12/2004


Hello, I'm in the same boat, looking for owner-builder insurance including liability. It seems that it may be possible to get builder's risk insurance without a general contractor. However, in my mind, liability insurance is even more important. I'm an attorney, so I know the devastation that tort claims could have on somebody without liability insurance.

For example, workmen's comp. may not stop a worker who is injured from suing you in court, saying your negligence caused his injury. Same is true if somebody comes into the house, say a friend or a neighbor, or a kid sneaking in after dark. If they are hurt, you are not covered. You could lose everything to a multi-million dollar death or injury claim, lose your house, have your wages garnished, basically ruin your life. So if anybody has any ideas on actually getting liability insurance, I'd love to hear them!


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By Robert on 8/14/2004


Chris, at the last minute I found an insurance company that would issue me liability insurance, in the state I was building, North Carolina. The issuing company is United States Liability Insurance Group, USLI.com, 800-523-5545. You might also check out insurance policies online 800-230-5737. I don't have a web address for them. I was the contractor for my own home, without a license, from Massachusetts, building in NC. It all worked out for the best. Good luck.

Bob

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By Robert on 8/14/2004


Oh - Builders Risk was $426 for a $300,000 and $522 for liability. If you need North Carolina insurance agencies, PM me.
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By John in Erie, CO on 8/20/2004


Liability and Builders Risk - I would recommend getting a homeowners policy with a builders risk rider, and then look at an extra umbrella to give you a little bit of extra coverage if something happens where liability would be in question.
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By Bill in Aurora, CO on 10/4/2004


I need to find an insurance company that will give me a builders risk policy without having a general contractor assigned to the project. Any recommendations?

Bill
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By Robert on 10/4/2004


See my earlier reply. They just sent me a form to renew!

Bob
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By Chris in Los Angeles, CA on 10/4/2004


Since I posted my original message, I have figured out a way to proceed. I hired a general contractor friend of mine as site manager for the project. Through him, I was able to purchase liability insurance for the project ($1 million). I also was able to purchase builder's risk insurance for the structure (about $500K). The total insurance cost for this was about $5,700. I'm located in Los Angeles, CA.
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By John in Erie, CO on 10/4/2004


Yikes. It must be a regional thing. I think most areas (CA excluded) you can buy a homeowners policy with a "builders risk" rider on it that will cover you (but not for workmen's comp if you are hiring people directly). Add an umbrella for $1 million (usually only a hundred bucks a year) and you are reasonably well covered. (Of course, depending on your assets). I know a guy out here who went this route, with a two million dollar umbrella, and he spent ~ $900/year for the house/builders risk policy and about $200 for the extra liability.
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By Kenneth in Lees Summit, MO on 10/5/2004


I considered hiring a GC as project consultant as well. One thing that really struck home was that I could then purchase builder's risk insurance through him at a considerably better price than I could get on the street. In the end, I decided that the project consultant agreement just wasn't going to work for me. I purchased builder's risk insurance through Farmer's Insurance Group.
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By Nancy in Tampa, FL on 10/5/2004


I've posted elsewhere about this, but... try your own insurance person first. We used State Farm. Also Nationwide is known to write these policies.
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By Nancy in Tampa, FL on 10/5/2004


We're building in Florida, so things might be different in other parts of the country. We only hire a sub that carries his own personal liability and has workmen's comp on his employees. We get copies of this and notify the insurance office that we want to be notified if the policy lapses or is cancelled. Then you're covered. We have a builder's policy (State Farm) that covers anyone hurt on the site who is not working on the job.
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By Jerry in NY on 11/13/2004


Hi, I went into my State Farm agent to purchase a builder's risk policy for a home I was building, which he confirmed in writing I had. During construction, I had a theft of construction materials which State Farm refused to cover. In depositions, the agent and several employees swore, under oath, that State Farm does not sell builder's risk insurance. State Farm, also to my surprise, stated they would never sell a policy to a contractor building his own home, because underwriting would never allow it, due to the risk factor, though I found several contractors who they sold policies to for homes they were building for themselves.

I am in a David-and-Goliath court battle against State Farm and am looking for other owner-builders that State Farm represented to have sold builder's risk policies to. Any help would be greatly appreciated, whether you have had a claim or not. I am just looking to get the truth out, since they refuse to turn over any documents in their control. I need to depend on the honesty and goodwill of people who understand that they could easily be in my shoes.

Thanks,

Jerry

 


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By Susan in Middleburg, FL on 11/28/2004


Jerry I haven't purchased my policy yet from State Farm, but I spoke to them last week. I explained what I was doing and she said I need the builder's risk policy. I don't need the actual policy until next month but if I decide to go with them I will give you any info I can that will help.

What are they telling you? They aren't honoring your policy? Maybe I should reconsider State Farm... unfortunately they handle all of my insurance.

Susan


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By Gill in WA on 1/15/2005


chaseagency.com/builderrisktype

I found this link, I haven't looked into it yet, but I thought I would at least share it.

Good luck!

Gill


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By Jane on 2/23/2005


If you get Workmens' Comp insurance yourself, how many people do you have to cover? In other words, do you have to list all your subs and all their employees? What kind of cost are we talking about? (I am reposting this to appear as most recent. This first question refers to a statement from an older entry.)

My husband and I are going to act as our own GC. Many of the subs work by themselves. While they "have" Workmens' Comp (required by law), they can exempt themselves (i.e. only cover someone working for them). So, we would be liable if they themselves got hurt, so we have been told. Some of you have suggested that their own liability insurance should cover them.

We have been talking to insurance agencies and brokers, as well as Workmens' Comp Administration (we are in New Mexico). We have been told the following:

1) Builder's Risk Insurance covers damage to the house under construction and theft of building materials from the site. It must be started before construction begins.

2) Course of Construction Insurance covers damage to the house under construction and liability. This is the insurance that can be converted into a Homeowner's Policy after construction is completed.

3) You can't get both! The reason is that the house would be covered twice, and coverage cannot be duplicated. General Liability insurance is expensive: at least $5,000, and it may be available only to licensed contractors, as many of the other writers have indicated.

4) A Personal Liability Umbrella Policy will not cover incidents at a construction site.

Like I said, this is what we have garnered so far, but are still working on it. Does anyone have experience with an umbrella coverage actually paying for a liability claim at a construction site? If so, what company was it? If all we have been told is true, we think it would probably be better to have the liability insurance included in the Course of Construction policy rather than the theft insurance in the Builder's Risk insurance. We will rent a storage container that will be brought onsite and put a sturdy lock on it to discourage theft. This will cost $100/month for a 20x8 foot unit, plus transportation both ways.

Jane


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By Carl in Cary, NC on 3/12/2005


Here is what I have found so far regarding insurance building using IndyMac Bank for financing:

  1. IndyMac requires Builders Risk, Personal Liability insurance and Workers Compensation for all trades and their employees who will perform work on the construction project including the O-B. The O-B can sign a workers compensation waiver that will relieve IndyMac from any Workers Compensation claims, however the O-B can still be held responsible for claims brought by an employee of a contractor who was not covered by the contractor's Workers Comp policy (Check with your state Dept. of Labor for your state's law.) which can be purchased from a number of Insurance companies.
  2. What is builder's risk insurance? What is course of construction insurance?
    Builder's risk insurance and course of construction insurance are terms used interchangeably to describe one type of insurance policy that provides coverage against loss to real estate under construction or being remodeled. (Taken from Chase Financial Services.)

    chaseagency.com/buildersriskFAQ

  3. I highly recommend that you require every and all contractors performing work on your construction project to supply you with a certificate of insurance with a minimum $1,000,000 worth of liability insurance, $500,000 property damage and $500,000 personal injury, with you as one of the certificate holders. This may satisfy your bank's liability requirements, check with your bank. Make sure you contact the insurance company and request that you be notified if the policy changes or is canceled.
  4. If possible, set up a Limited Liability Company, then purchase liability insurance. Set the business up as a consulting business, that way your business can provide consulting service to you: mycorporation.com/llc and perform the construction under the LLC. Doing so has advantages beyond limiting your liability. When dealing with suppliers, I am finding that they treat me like a business as opposed to an individual. Make sure you create letterhead, purchase orders, etc. The more professional and organized you come across, the better service you will receive. You will also find that suppliers are more willing to negotiate pricing because they know if your purchases are a one shot deal or you are a new customer who will be doing repeat business. You do not have to tell them you are an O-B.
  5. Make sure you purchase the right type of insurance: Builders Risk Policy for Property Loss.
    These policies cover damages or destruction by fire, lightning, windstorm, hail, explosion, aircraft, motor vehicle, smoke, vandalism and malicious mischief. An "all risk" coverage provides coverage against all risks of physical loss or damage to the described property. Under a "stated perils" policy, the burden of proving that a loss occurred by reason of a particular peril rests on the insured. Under all risk insurance, the burden of proving any specific exclusion to the occurrence rests on the insurance company. Therefore, an all risk policy provides the insured with a simpler method of proving his case.

    Insurance should be carried by a builder for the full value of labor and materials entailed. The replacement cost of these materials and labor should be the amount of the insurance carried. There is an exclusion to general builders risk policies for any loss or damage caused by faulty or defective workmanship, or by defective, improper design or mechanical breakdown. However, resulting damage caused by these items is covered under the policy. It should be noted that not all policies give coverage for resulting damage. Some do and some do not; it is necessary to check the exclusions in each policy. Determining the nature and extent of necessary insurance coverage can be a complex issue. Anyone involved in the building trades should be familiar with the options or at least have a reputable broker or agent with whom to consult. I hope you find this information helpful.


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By Michael in Sandy, UT on 3/14/2005


Well, I know this is an older thread, but I just read it and had to put in what I know. We use State Farm, have for years. When I went in and told our agent we were owner-building, he didn't have any problems with it. We do not have "builder's risk" insurance though, he said that was not the route for us to go (maybe because of what you are saying and maybe because we are owner-builders, he just said, no do it this way for the best protection for your buck). They just flat out insured the house and property for the full appraised value starting day one of construction.

True, it does not have that value in it quite yet, but it gives us the added protection of what our normal H/O policy had before: the $500,000 per incident thing. On top of that, we have always carried a $1 million umbrella. We kept that for this construction. We are discussing moving it to a $2 million umbrella for the duration of construction "just in case". We are nervous ninnies, so maybe we are overpaying, but I would rather be safe than sorry.

Now, our agent did say that this policy would only cover theft if the items are attached to the house... i.e. if someone steals all your appliances that were put in the garage but not installed that day, you are screwed. So we have to be careful to make sure all deliveries coincide with their dates of installation (appliances, windows, etc).

Our framer is responsible for all lumber drops, he knows that, it is in his contract. If stuff disappears because he leaves stacks, it is his problem not ours, same with the mason and bricks. We decided that since it is spring/summer for our construction, we will probably spend a night or two at the lot with our dog if stuff does get dropped and cannot be immediately attached that day. That way, if someone comes at night, we'll be there. And I am required to be present for all drops so that I can account for what is dropped and put it on that sub's shoulders (mostly framer) if he claims stuff is "stolen" during the day.


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By Townes in Austin, TX on 3/2/2006


Construction theft has skyrocketed! Some don't qualify for credit accounts so they just take it from you. I suggest either having the garage finished to a point of securement or rent a portable storage unit giving the keys to each sub and have them sign for the key. Have somebody there for deliveries and put it in then. This takes planning. Wood and other materials left in the elements will mold and you'll transfer it into your new structure. Don't install kitchen appliances, A/C's or spas until you're ready to occupy. Don't hire companies that have questionable workers. They tell a friend and - bam! Cover yourself, and build your dream.

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