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Many construction contracts provide for “builder’s risk” coverage to be obtained by the owner.

Generally speaking, builder’s risk insurance covers the risk of loss or damage to construction work during the construction process and is issued to the owner prior to permanent property insurance being placed.

Many builder’s risk insurance policies exclude certain types of property damage losses.  For example, losses resulting from pollution, rain and defective workmanship are typically excluded; however, policy provisions must be carefully examined as ensuing losses are often covered.

Therefore, whether the builder’s risk is obtained by the owner or general contractor, it is imperative to obtain a copy of the policy to determine the coverages and the exclusions in order that the parties can ascertain from their own agent whether or not the exclusions are covered by their own insurance policies.

Builder’s risk policies should include as additional insureds’ respective parties, i.e. owner or general contractor, including subcontractors.

Some form of contracts used by RI construction attorneys contain the phrase that the contractor or owner “assumes all risk of loss”.  This risk should be deleted, since “risk of loss” in fact means that the owner or general contractor assumes builder’s risk coverage and any other damages during the construction activity.  A builder’s risk obligation for property damage insurance coverage should not become a general indemnity provision.

Proper defined insurance coverage is essential to avoid adverse results that may arise out ofRI construction litigation or Rhode Island arbitration disputes

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