More and more, we field calls from our customers on this important subject.  Our customer, who might be the realtor or the owner of a property is looking to have it remodeled or maybe it's a foreclosure and needs some TLC before it's listed.   

It's a great idea to not only work with licensed contractors but, contractors that carry a general liability and or builder's risk insurance policy. 

Here is a brief overview of both types of coverage and their importance.

Builder's Risk or Course of Construction:

Builder's Risk indemnifies for loss of or damage to a building under construction or remodel. Insurance is normally written for a specified amount on the building and applies only in the course of construction. Coverage customarily includes fire and extended coverage and vandalism and malicious mischief. Builders risk coverage can be extended to a "special" form as well. The builders risk policy also may include coverage for items in transit to the construction site (up to a certain percentage of value) and items stored at the site

Generally, this is secured by the builder with the owner and lender named as additional insured interests on the policy.

General Liability:

Under a general liability insurance policy, the insurer is obligated to pay the legal costs of a business in a covered liability claim or lawsuit. Covered liability claims include bodily injury, property damage, personal injury, and advertising injury (damage from slander or false advertising). The insurance company also covers compensatory and general damages. Punitive damages aren't covered under general liability insurance policies because they're considered to be punishment for intentional acts.

Again, this should already be in place by the General Contractor.  This protects the owner and lender from potential claims arising out of liability claims from property damage and bodily injury.  The General Contractor should either cover or make sure all sub contractors have their own general liability policies in place.

It is critical for a project to be covered from the beginning to the end with the right coverage.  Working with a team of professionals that can lead you in the right direction will take certain risks out of the picture.  This will enable you to focus on selling the property!

 It's also a great idea to ask for certificates of insurance from your contractors and to have them add you as additionally insured on their policies. 

Gary Hanson

Professional Insurance Strategies, LLC

602-481-0161

www.proinsgroup.com