This is a REALLY hot topic at the moment.
New construction requires a level of insurance that many developers have found prohibitive. Believe it or not, some developers have chosen to be vastly under insured in the case of a construction claim!
As Realtors, we are comming across this issue with some frequency. If nothing happens, well then, no one ever finds out. It’s when something major goes wrong that suddenly knowing the level of your contractors insurance is important.
Again, information and asking the right questions is absolutely KEY. It’s a simple question:
“Is your project insured, and may I see the documents?”
Realtors working with Developers know about this issue, and should be able to gather the documents together in very short order. Often times you can speak with the Developer’s insurance agent and they can give you a quick overview of the coverage.
As a Buyer, you want to be comfortable that the Builder is insured under the correct type of insurance,(For example, as a General Contractor, with home construction as the basis of their insurance, and not a sub-contractor, building a property beyond their insurance scope) and in the correct amount. This can become an issue in the following ways:
1. Improper insurance can complicate your mortgage process
2. Improper insurance can complicate your ability to get homeowners insurance at a competetive rate
More often these days, Insurance is based per project, but that too can be fraught with complications. It is not out of the question to do background checks on the insurance company. In the event of a major claim, they could become a partner of yours….
In this day and age of large insurance claims……….Make sure you are covered!