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Builder’s Risk Insurance

Many construction companies and property owners purchase builder’s risk insurance if they’re building an infrastructure. Builder’s risk is a first-party insurance designed to protect the policyholder from risks they may face during construction, repair or renovation of a structure. It generally covers the material, supplies, equipment onsite and the property itself if it undergoes an unforeseen peril such as a hurricane or fire.

The purpose of builder’s risk is to provide coverage in case any incidents damage the property. However, insurance companies may deny viable claims because they wish to make as much money as they can off of their policyholders. This means they are acting in bad faith and can be held liable for their deceptive actions. If you believe your insurer is acting in bad faith, then it’s imperative you contact an experienced insurance claims attorney.

Dallas Attorney for Builder’s Risk Claims in Texas

Construction contracts and insurance policies are the backbone of successful development projects. Unfortunately, your insurance company may put a hold on your progress if they refuse your viable claim. Rejecting a valid claim is a bad faith action, meaning your insurance company can be held legally responsible for their actions.

You deserve to have coverage and the attorneys at LeMaster & Ahmed PLLC want to help you receive it. We actively represent property owners, architects, engineers, general contractors, subcontractors, suppliers and anyone having issues with their builder’s risk coverage. We are well-equipped to address not only the complexity of these cases, but also the unique concerns and issues that may arise when representing construction companies or property owners.

Pick up the phone to call us now at (888) 306-2119. With our extensive experience in construction and property insurance litigation, we can provide excellent legal representation for you. LeMaster & Ahmed PLLC represents people throughout the greater Montgomery County area and surrounding counties including Collin County, Dallas County, Harris County, and Galveston County.

Overview of Builder’s Risk Claims in TX

What Does Builder’s Risk Cover in Texas?

Builder’s risk is a type of coverage for policyholders who face risks while constructing, repairing or renovating a building or infrastructure. It is designed to protect you as the policyholder from unforeseen perils such as fires, wind damage or theft and vandalism. Additionally, builder’s risk can provide protection for delays, loss of market, faulty workmanship, and other indirect consequential losses.

Not all builder’s risk policies are the same, but most tend to be written on an “all-risk” basis. In other words, it will cover all causes of loss except for those specifically excluded from the policy. A typical builder’s risk policy covers the following:

  • Fire damage;
  • Specific types of water damage;
  • Lightning;
  • Hail;
  • Unforeseen explosions;
  • Theft or vandalism;
  • Materials, supplies and equipment onsite; and
  • Vehicles or aircraft crashing into the structure

Coverage can be extended for builder’s risk for additional “soft costs” that are incurred because of a delay in construction. These construction overhead costs include, but are not limited to:

  • Real estate taxes;
  • Architect fees;
  • Bond and permit fees;
  • Legal and accounting fees;
  • Interest;
  • Extended general conditions costs such as portable toilets and water; and
  • Lost sales or rental income

An important aspect of builder’s risk to remember is that the policies usually only cover new construction costs. This means your insurance may only provide coverage to the newly renovated or repaired parts of the building if you’re working on an existing structure. The policy may only address the value of the new construction costs and will disregard any damages to the existing structure.

For example, suppose you purchased builder’s risk for a renovation project on a house. Unfortunately, the house sustains serious fire damage because of an unexpected construction accident. Your builder’s risk insurance may only cover the cost of damage done to the newly repaired parts and not any of the existing structure.

Why Was My Builder’s Risk Claim Denied?

Insurance companies reserve the right to deny coverage that is outside of your policy. However, some insurers reject perfectly valid claims so they can profit from your account. Deceptive insurance companies may utilize various tactics to convince you their denial is within their rights as an insurance company. A common strategy used is to state that the claim you filed is excluded from your policy.

Exclusions are losses that aren’t listed in your insurance policy. Your insurance many declare that your damages are excluded from the policy so they cannot provide coverage. They may use confusing verbiage and intentionally misinterpret your claim so they can reject it entirely. However, builder’s risk insurance does have exclusions depending on the policy. These can include wear and tear, war damages, flood damage, earthquakes or design errors.

In some cases, your insurance may state that the damages already existed before you experienced any unforeseen peril. They could claim you weren’t aware that the damage was pre-existing or they may suspect you of insurance fraud. For example, imagine you have builder’s insurance for a new hotel you and your construction team are renovating. Suppose a storm occurred and there was significant water damage. Your insurance may state that the warped floors from the water damage already existed, so they cannot provide coverage.

Challenging a Denied Builder’s Risk Claim in Texas

Your claim may have been denied, but you don’t have to give up on pursuing coverage. If you believe your insurance acted deceptively, then you may be eligible to file a bad faith claim. An insurance company acts in bad faith when they intentionally fail to uphold their implied and expressed duty as an insurer. You may be able to file a claim against your insurance company and receive compensation for any losses you experienced since the denial.

It’s highly recommended you hire effective legal counsel if you wish to file a bad faith claim. Insurance law is incredibly intricate, and you will need extensive resources to go up against a large insurance company. Most insurers already have legal teams on standby, so it’s incredibly important you’re prepared for what’s next.

If you win your case, the court will grant you a monetary award. The compensation will reflect any and all losses you suffered because of your insurer’s actions. These may include:

  • Repairs;
  • Loss of income;
  • Lost wages;
  • Attorney’s fees;
  • Interest;
  • Costs from extending construction;
  • Construction delay-related costs; and
  • Mental anguish

Additional Resources

Understanding Builder’s Risk Insurance – Visit the official website for the Balance Small Business, a place dedicated to giving advice on small businesses, entrepreneurship and management. Access their site to learn more about builder’s risk insurance, what it covers, what’s excluded from builder’s risk and the cost of insurance.

Commercial Property Insurance – Visit the official website of the Texas Department of Insurance to learn more about property insurance. Learn the various coverage options, the difference between replacement cost and actual cash value, as well as other coverages you may need to extend your protection.

Builder’s Risk Claim Lawyer in Montgomery County, TX

Overseeing or managing a construction project is stressful enough. When your insurance company doesn’t pull through it can lead to a nightmare of costs and lost time. If you believe your claim was denied without reason, then we recommend you contact the attorneys at LeMaster & Ahmed PLLC.

Our lawyers are well-versed in insurance law and construction accident litigation. We have represented insured and insurers in a host of cases involving the following issues: commercial, industrial, residential, governmental, condominium complexes, planned developments, school districts, university structures and other construction projects. Let us guide you through this legal process so you can finally receive the compensation you deserve.

Call us now at (888) 306-2119 and set up a free consultation LeMaster & Ahmed PLLC practices throughout The Woodlands and Dallas area and surrounding cities including Conroe, Magnolia, Willis, Splendora, Pinehurst and Montgomery.