A house is the single largest investment most people ever make, which makes it a key component of their financial portfolio. For that reason, it is crucial that any homeowners policy in effect will do what it is intended to do: cover the cost of replacing a home if it is destroyed or damaged beyond repair. Adding guaranteed replacement coverage to your policy helps ensure this.
Purchase Price vs. House Value
When you bought your house, you probably had an appraisal done. For many homeowners, that is the last time — at least for a while — they think about the home’s value. However, markets can fluctuate and, over time, house values have historically increased. In some areas, prices have doubled or tripled in a very short timeframe. If your insurance policy is based on the purchase price, you may not have enough coverage to cover the current market value.
Variable Construction Costs
Construction costs are not stagnant. They rise and fall with the rest of the market. Consequently, a rebuilding estimate from five years ago may be completely off the mark today. If your policy is based on an old estimate, you may not have enough coverage to rebuild. Increased demand and reduced supply after a major disaster and rising employment costs in construction trades are just a few of the things that tend to affect construction costs.
Guaranteed replacement coverage fills the gap between your standard policy’s limits and the actual cost to rebuild. With it, you won’t have to worry about rising construction costs or increasing home values.
There are plenty of risks associated with the construction industry. From the dangerous machinery used to build structures to the errors caused by workers, you want to be sure that your insurance covers all of your bases. For some business owners, a Course of Construction insurance policy can be advantageous. Review these basic points and get a better idea of how this policy can protect your company and your assets from the unknown.
How COC Insurance Works
Also known as builders risk insurance, COC insurance is a standard policy taken out by most professionals within the construction industry. This plan covers a number of scenarios that a general liability policy will not. For example, an earthquake is a natural disaster that can cause massive damage to a construction site. With a COC policy, you will be protected against any costs that are incurred from damage beyond your control. A number of fees and expenses in the construction field are also covered by this policy, including those associated with constant presence from the fire department. Additional protections include:
- Coverage against government action
- Covered losses in situations of vandalism
- Protection against most common unfortunate events
Protection Against Common Risks
While there are plenty of risks in the construction industry, a comprehensive insurance plan can keep you and your assets protected at all times. Look over the details and get a better idea of how a COC policy can help cover all your bases.
Sometimes construction projects may run into regrettable snags. For example, financial issues may arise when the contractor fails to complete a project on time or meet contract specifications. Fortunately, construction bonds can help mitigate the effects of these types of disruptions. So, what are construction bonds? Simply put, they are a type of surety bond within the construction industry used to protect companies against unplanned interferences or delays. If you’re not familiar with construction bonds, then here are a few things to consider before you begin your next project.
According to https://www.danielsinsuranceinc.com/, Contractor License Bonds are required by the state before you begin work on anything. These bonds ensure that all required licensing is complete before the project’s start date. If contractors aren’t adequately licensed, you may be liable for any penalties, fines or legal action incurred on the site. Contractors must also obtain Payment Bonds on projects exceeding $100,000. This requirement applies to both residential and public projects.
Many other bonds are optional; however, they could still benefit your next construction site. Some of these voluntary bonds include:
- Bid Bonds – ensure the contractor stands by the awarded contract amount.
- Subdivision Bonds – require contractors to begin work on subdivisions appropriately and within existing streets, sidewalks and waste management systems.
- Performance Bonds – guarantee the completion of a project within the specified timeline on the contact.
- Supply Bonds – ensure contractors obtain suitable supplies and materials.
- Maintenance Bonds – protect the project owner from design imperfections and other failures.