Archives for posts with tag: insurance

Educate Yourself about Builder’s Risk Insurance

 

Almost every homeowner insures their home. A typical homeowner’s policy protects against fire, hail, theft, and other common perils. However, a typical homeowner’s policy covers completed structures. Therefore, if you plan to build or have built a custom home or other significant structure, you will need to make sure you have insurance that provides coverage during the construction process.

Builder’s risk insurance is a special type of property insurance for the construction process. Generally, builder’s risk insurance is coverage that protects a person’s or organization’s insurable interest in materials, fixtures and equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from a covered loss.” Usually written for a specific project, builders risks policies will cover “named perils” of loss caused by external causes (such as fire or hail), but also may cover property damage caused by acts of third parties (theft or vandalism). Most builders risk policies are written on an “all risk” basis, meaning that the policy will cover all risks of property damage unless the cause is specifically excluded. Such policies may be referred to as ARBR (all risk builders risk) or CAR (construction all risks policies). In addition, contractors will sometimes obtain builders risk “floater” policies that are not project specific, but that will cover, subject perhaps to lower limits than a project-specific builders risk policy, property damage at any project undertaken by the insured contractor.

Although coverage is often purchased by the custom builder or general contractor, property owners should purchase this coverage or contract with the builder or general contractor to be a named insured in the policy. Many times, proof of builder’s risk coverage is necessary to comply with local city, county, and state building codes. If you are the owner of the property and are commissioning new construction, you are the one most likely to suffer if construction is delayed because the builders risk policy was not in place. Further, some in the construction industry believe that it is the property owner who should have the builder’s risk policy because they have already paid for the improvements to their land, and if the builder receives the funds directly from a claim, theoretically, they could abscond with that benefit. Therefore, it is far safer for the property owner to obtain the builder’s risk policy, because they already own the building, even while it is under construction. If something happens to the under-construction project, then they should be the beneficiary and control how the funds are spent.

Although commonly written as an all risk policy, common exclusions significantly limit what “all” means. By far, the most significant limit on builder’s risk coverage is flawed workmanship. If your builders risk policy includes a faulty workmanship exclusion, you may need additional insurance coverage to protect you from this specific risk. Some insurance companies offer an endorsement to remove the common faulty workmanship exclusion. Every owner should inquire about this option and purchase this coverage if it is available. If such coverage is not available, then other options include performance bonds and/or well-drafted warranties in your construction contract. Always be aware, a contract is only as good as the person you contract with. If you have the world’s best warranty and you make it with a contractor who is broke and changes his business name once a year, it’s not worth the paper it is written on. One exception to this rule (at least as to the ability to perform) is insurance. Insurance is a highly regulated industry. Part of what that regulation makes certain of is that insurance companies have the funds available to pay the claims made on their policies. Especially in Texas, there is nothing that ensures a contractor can or will stand behind his construction warranty.

Other common exclusions from builder’s risk policies include earthquakes and floods. In Texas, earthquakes are extremely unlikely, but flooding is not. Fortunately, FEMA maintains and updates flood maps regularly used for identifying suitable construction sites. Generally, if you are building outside of the 100 year flood plain, flooding will not be an issue. In most cities and counties in Texas, you are required to obtain a construction permit, one of the conditions of which, is that you are not building in the 100 year flood plain. In lieu of or in addition to checking the FEMA maps yourself, your construction contract with your general contractor should include that they are required to obtain all necessary permits. If you are building in an unincorporated area outside of Denton County, I recommend you check with the FEMA map yourself.

Finally, be aware there are many soft costs that may not be covered by builder’s risk coverage. A soft cost is money you lose during the time it takes to move forward with your project after a covered loss. Soft costs may include additional insurance premiums, legal fees, and construction loan interest. Some policies will include soft costs, and some might not. If you discover that your builders risk insurance doesn’t cover soft costs, consult with your insurance agent about adding supplemental coverage.

 

 

 

Advertisements

If you’ve been hit by another car or truck, check to see if the driver is wearing a uniform or if the vehicle they are driving has company logos on it. In addition to the driver being held liable for his or her own negligence, their employer may also be liable if the driver was acting in the scope of their employment (in other words, if they are acting in the furtherance of the employer’s business). For example, if the defendant driver is making a delivery for his or her employer and hits you, he or she is probably acting within the scope of their employment. However, an employee is not acting within the scope of their employment if he or she departs from the furtherance of the employer’s business for a purpose of his or her own not connected with their employment and has not returned to the place of departure or to a place the employee is required to be in the performance of their duties. For example, if the defendant driver, while making a delivery, decides to run home to check on their dog and hits you pulling out of their driveway, the defendant driver would have deviated from the furtherance of his employer’s business. While the defendant driver is individually liable for his negligence, the employer would not be. If you have been injured in an automobile or truck accident, call Brian Cartwright at (940) 891-0003 to set up a cost-free consultation to discuss the facts of your case and determine what your rights are. I look forward to visiting with you next time. Brian T. Cartwright, Board Certified, Personal Injury Trial Law, AV-Rated, Martindale-Hubbell, Shareholder, Alagood Cartwright Burke PC.

Image Many clients are  reluctant to report claims on their auto insurance policies.  Their single greatest fear is that it will increase their future premiums.  Whether or not your rates will increase depends on multiple factors, including who your insurer is, how long you have been with them, what type of claim you are filing, and how many claims in the past that you have filed.  If a claim is filed under your auto policy, and you have been with the company less than a decade, and you have had one or more past claims, there is a good chance that your premiums could go up.  Because of this, many people try to avoid involving their auto carrier.  Be careful, however.  There is often one or more provisions in your automobile policy that requires you to report any loss and not prejudice the insurance company’s duty to defend you.  If you fail to follow these provisions, and your failure results in the carrier being prejudiced, the insurance company may wind up denying coverage if you, the other party, or the other party’s insurance company winds up later filing a claim for whatever reason.  For example, suppose you are involved in what you think is a minor fender bender.  You don’t report the matter to your insurance company, you tell the other party that the car accident was your fault, and, in trying to be a good person, you verbally agree to pay for the property damage as well as the person’s damages resulting from the wreck.  Now suppose that what the other party originally believed was whip lash actually was a herniated disk and, when you refuse to pay the thousands of dollars of medical expenses to treat the person’s injuries, you or the other party files a claim with your insurance company.  There is a good chance that the insurance company could deny the claim, reasoning that you accepted liability, prevented the carrier from asserting any potential defense, and they are now stuck with paying the bill.  At the end of the day, before you experience any loss, you probably should contact your agent and ask them what situations could result in your premiums being increased and by how much.  You should also ask them what duties you have under the Policy as to reporting claims, the effect of not doing so, and what provisions in the Policy that set your duties and responsibilities in the event of a claim.  I would recommend documenting who you spoke with, the date and time that you spoke with them, and what the person told you.

 Brian T. Cartwright is Board Certified in Personal Injury Trial Law by the Texas Board of Legal Specialization and can be reached at bcartwright@dentonlaw.com and at http://www.dentonlaw.com.