When do I need contract insurance?
When do I need contract insurance?
When faced with a construction or renovation task, it is important to consider how best to insure yourself against unforeseen events. A construction insurance may be a necessity, depending on the scope and nature of the project. But when do you need contract insurance and what does it actually cover? In this article, we will review when a contract insurance is relevant, who needs it, as well as How much does a construction insurance cost?
What is a contract insurance?
A construction insurance is an insurance policy that covers damage to the building during construction or renovation. The insurance protects against damage that may occur as a result of weathering, theft, vandalism or errors during construction. It can also cover damage that occurs as a result of defects in materials or workmanship.
There are different types of construction insurance, including private contractor insurance, relevant for private builders, as well as more comprehensive insurance for companies and contractors.
When do I need contract insurance?
You should consider taking out construction insurance in the following situations:
- By new construction — If you are building a new house or other major construction, construction insurance is often a necessity.
- For major renovations — If you need to renovate your house, for example, expand it with an extension, change load-bearing structures or replace the roof, you should make sure you have one private contractor insurance.
- When remodeling — If you are doing a major redevelopment of your home, it can be advantageous to be covered, as the construction process can bring unforeseen risks.
- If your bank or lender requires it “Many banks require active construction insurance before they want to finance a major construction project.
- If you are a builder yourself — When you hire craftsmen and contractors yourself, you are responsible for securing the construction against damage. A construction insurance protects you from financial losses in case of damage along the way.
What does a contractor's insurance cover?
A private contractor insurance may vary in coverage depending on the insurer, but typically it covers:
- Damage caused by weathering, e.g. storm, cloudburst and frost
- Theft of building materials and tools from the construction site
- Damage due to defects in materials or workmanship
- Vandalism at the construction site
- Damage to the existing building caused by the construction
It is important to review the insurance terms thoroughly to ensure that your insurance covers exactly your project.
How much does a contractor insurance cost?
How much does a contractor insurance cost? The price depends on several factors, including:
- The size and value of the project
- Length of construction period
- Scope of coverage
- Individual assessment of the insurer
As a rule of thumb, one can private contractor insurance costs between DKK 5,000 and DKK 20,000, depending on the size of the project and the risk factors. You may want to obtain quotes from several insurers to get the best price and coverage.
How to take out a construction insurance?
To take out a construction insurance policy, you need to contact an insurance company that offers this type of insurance. You will typically need to disclose:
- A description of the construction project
- Construction sum
- Start and end dates of the project
- What craftsmen and contractors are involved
It's a good idea to get advice from the insurance company to ensure you have the right coverage for your project.
Read more about contract insurance and coverages by press here.
Contact Joint Insurance by phone number +45 40 50 84 84 or sign you up for a call by press here.
