Builders Risk & Construction Liability for Veterinarians

Builder's Risk

Specialized coverage for projects under construction - material, structures, and equipment

This coverage bridges the gap between raw construction sites and finished, occupied structures, protecting the financial investment when standard property insurance is not yet applicable or available.

What is Builder's Risk Insurance?

Builder's risk insurance is a specialized type of property insurance that helps protect buildings under construction. It is essential in helping protect construction projects but can be complex and often misunderstood. However, having a properly structured builder's risk policy can be crucial. In fact, it will serve as the backbone of a successful risk management program.

Builder's risk insurance helps protect construction projects from property damage due to:

Fire
Lightning
Hail
Explosion
Theft
Vandalism
Wind
Flood
Earthquake

Who needs Builder's Risk coverage?

Any person or company with a financial interest in the construction project needs a builder's risk insurance policy. Some common people you may want to include on your policy as insureds or additional insureds include:

Property owners
Tenants doing leasehold improvements/betterments
General contractors

The contractor dilema

When building a structure from the ground up, remodeling an existing building, or simply increasing the square footage of your existing hospital, builder's risk is a critical component of protection for your project. To simplify the process many contractors will offer to provide builder's risk for you and include the cost of insurance in the cost of construction. This should be avoided for a variety of reasons:

Change Orders: Virtually every construction project experiences change orders during their course. Often those changes increase the cost which may require alterations to your builder's risk limit of coverage. However, contractors are notorious for not making those changes to builders' risk policies after construction commences. So for example, if you are building your new hospital and borrow additional money to complete alterations, not originally contemplated, what happens if the structure burns to the ground before construction is complete and the limit of insurance is too low? Always retain the power to make changes to the builder's risk policy through an agent that represents you, not the contractor.
Profit Centers: Contractors that provide builders risk insurance often charge more money to their customers than the policy actually costs. As a result, the contractor is even less likely to make changes to the policy limit for change orders because it can erode their profit unless they charge more money to you for those policy alterations.
Not all liability is the same: Contractors will charge you for their liability insurance. This is a common practice. However, the contractor's liability does not mean you have liability on the land, structure or leasehold space for third-party injuries. The contractor's liability protects them if they cause bodily injury or property damage. Never confuse their liability for having your own coverage on a location you own or lease

How does Builder's Risk & Construction Liability Insurance Work?

During construction, builders risk insurance covers a contractor's materials, equipment, and the property where the construction is taking place. The coverage lasts from when the policy starts until a project is complete and the owner signs off on the project.

Construction liability insurance, which is typically provided separately from Builder's Risk, protects a veterinary practice undergoing construction from risks relating to bodily harm and the lawsuits that may follow. A standard construction liability policy can cover:

A physical injury on your property to a third-party
An employee causing injuries or property damage to a third party

The critical distinction to remember between builder's risk insurance and construction liability insurance is that builder's risk insurance is more focused on materials, equipment, and property. Construction liability insurance focuses more on bodily injury and lawsuits related to accidents, negligence, or safety issues.