Anyone who wants to build a house doesn’t just need secured financing. He or she also needs adequate insurance coverage so that the dream of owning a home does not turn into a nightmare before moving. Although it is very unlikely with the right construction partner by your side, one thing or another can go wrong during the construction phase. Without adequate insurance you could end up with life-threatening costs if, for example, accidents occur, storms destroy construction work or neighbors and visitors to the construction site suffer harm as a result of the work or inadequate safety. To ensure they are perfectly protected, builders should also seek the right insurance coverage early.
To cover the major risks of building a home, builders need four types of insurance: builder’s liability insurance, residential construction insurance, construction insurance and, in certain circumstances, construction workers’ accident insurance. We present them to you below.
INSURANCE NO. 1: MANUFACTURERS’ LIABILITY INSURANCE
The builder is responsible for safety on the construction site, even if the construction of the house is entrusted to external companies. In this sense, builder’s liability insurance is the most important insurance for builders. Some builders are already protected by their existing private liability insurance. At least for smaller construction projects up to €50,000, the protection provided by many policies may be sufficient.
Builder’s liability insurance protects the builder from legal claims for damages from third parties during the entire construction period. For example, if children who enter the construction site without authorization fall while playing in an inadequately protected basement, the builder’s liability insurance covers the damage. In this regard, the building owner is also insured against claims for damages if the craftsmen do not adequately secure the construction site or if the construction manager does not adequately supervise the construction site. Damage to a neighboring property is usually also insured.
The contribution to the builder’s liability insurance depends on the amount of the construction and the duration of the construction. The fundamental requirement is that the builder has the construction project carried out by specialized companies. If during the construction phase it is found that construction costs exceed the sum insured or that the agreed construction time is exceeded, builders must immediately contact their insurance company and extend the insurance coverage accordingly.
INSURANCE #2: RESIDENTIAL BUILDING INSURANCE
Owning a home is the largest investment in most people’s lives. To eliminate the risk of loss, the finished home must be protected from natural damage caused by fire, water or storms. But even during the construction phase, fires, lightning or explosions can undo weeks or months of work. Fire insurance covers this damage. Many banks also insist on taking out such insurance as a condition for granting a loan.
Smart builders take out home building insurance for the finished home before ground is broken, as many insurance companies include fire bullet insurance in their home building insurance for free.
INSURANCE #3: CONSTRUCTION INSURANCE
Less important than builder’s liability insurance and fire insurance, but just as useful, is construction insurance. Damage to the construction site that occurs for unforeseeable reasons is covered. So, if forces of nature such as storms or floods damage the unfinished building or if thieves steal sinks or faucets already installed in the unfinished home, construction insurance comes into play. It stands even when unknown vandals turn the half-finished house into a ruin. Building insurance not only pays for restoring the building to its original state, but also covers cleaning costs. However, the theft of materials not yet permanently fixed, as well as the loss or destruction of tools, construction equipment, scaffolding or vehicles of any kind, are excluded from insurance coverage.
Insurance coverage exists for the entire construction period, but usually does not exceed 12 months. The contribution depends on the construction cost. An excess is usually agreed upon. TO Building insurance for builders is already included in the flat rate, so you do not have to pay for this insurance cover separately. Furthermore, your construction partner is also insured against liability in all cases.
INSURANCE N. 4: ACCIDENT INSURANCE FOR CONSTRUCTION ASSISTANTS
Many builders rely on their own labor or private third-party support to save money when building a home. However, accidents can also occur. A helper is injured while working with heavy equipment or falling from a ladder. The consequences of such an accident can be devastating. That’s why builders also need insurance coverage for this.
Anyone who helps with construction work, be it a friend, relative or neighbor, is generally covered by legal insurance for construction workers in the event of accidents on the construction site, regardless of the salary or duration of the work. However, the builder is obliged to register his assistants in advance with the construction industry trade association (BG Bau). Contributions apply depending on the scope and duration of the activity. Even if the builder forgets to register, the statutory insurance protection for construction workers applies in the event of an accident. In this case, however, the manufacturer risks a significant fine.
The manufacturer himself and his spouse/registered partner are excluded from legal accident protection. Insurance coverage can, however, be obtained through an informal request to the relevant BG Bau or the builder can take out private insurance against accidents for construction workers.
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