For home construction, there are insurance policies that will step in if something goes wrong. If delays and damage occur during construction due to various circumstances, high costs can quickly arise: You, as the builder, are liable for damage that occurs during construction, must reacquire stolen materials and replace destroyed components of the shell itself. You are also responsible for your helpers. In order to absorb the sometimes very high financial burdens that these risks entail, there are various house construction insurances available.
Multiple builder's risk insurance policies are important
To cover your shell throughout the construction phase, it is not enough to take out a single insurance policy: Different policies take effect in case of different damages. In addition, it also plays a role whether you as the builder are the injured party yourself or a third party. The following insurance policies, in combination, provide good coverage until your home is finally ready for occupancy.
Builder's liability pays third-party claims
Damage to the health, property or assets of third parties arising in connection with your construction is paid for by builder's liability insurance. Whether a collapsing scaffold damages a parked car or children are injured while playing on the construction site without permission: The insurance pays for the costs. However, it is important that you take out this insurance before you start building, because you are liable from the first cut of the spade.
Construction performance insurance pays for your costs
Unlike builder's liability, which covers the costs of others, builder's risk insurance insures risks that cost you yourself:
- Elemental and storm damage
- Clumsiness or negligence of the construction workers
Both construction work and building materials and components are insured. Replacement of stolen materials that have already been permanently installed can be optionally included in the policy with this builder's insurance policy. Insurance is often limited to 24 months, sometimes 12 months, but can be easily extended if needed. It is advisable to keep them active throughout the construction period.
Fire insurance against fire damage
Elementary damage, which is covered by the construction performance insurance, does not include fire damage. For this, a separate house construction insurance is necessary, namely the fire crude construction insurance. The insurance coverage applies to fires caused by the following events:
- Lightning strike
- Short circuit
- defective gas pipes
Some insurers also include arson and the impact of aircraft or aircraft parts or cargo in the policies. For others, such damage can be insured as an option at an additional cost.
Construction helper insurance protects the helpers against
If you have friends or relatives help you with the construction, you must register them with the Berufsgenossenschaft Bau (BG Bau) (German Employer's Liability Insurance Association for Construction). Here you pay a premium rate per helper, but the helping persons are covered by statutory accident insurance. Notification is mandatory – if you fail to do so, you may be fined.
However, the statutory construction worker's compensation insurance only provides basic coverage. Moreover, it does not apply to the builder himself, his close relatives and spouse. These persons – and, depending on the risk, all other helpers as well – should be specially protected by private builder's risk insurance.
This is a very important builder's insurance policy. Especially if the injuries to the helpers are more serious, the costs can quickly become very high: Treatment, rehab, loss of earnings or even compensation for a disability swallow up large sums and can bankrupt the builder without insurance.
Liability insurance for undeveloped land
If you have purchased a building plot and the start of construction is still in the distant future or not yet planned, liability insurance for undeveloped land is worthwhile. This covers costs arising from damage suffered by someone in connection with the property.
As the owner, you have the duty of road safety, i.e. you must ensure that your property does not pose any risks to third parties. This includes, for example, the obligation to grit in winter or the trimming of trees and shrubs. If you fall on black ice in front of your property or a branch falls on a parked car, you would have to pay for the resulting damage yourself if you were not insured. Liability insurance for undeveloped land covers the costs for you.
Builders' insurance: Costs for individual policies
How much the individual house construction insurances cost often depends on the construction sum: In the case of builder's liability, construction performance insurance and fire shell insurance, insurance companies calculate premiums based on the estimated cost of construction. Basically, you can roughly calculate with one thousandth of the construction sum as premium. However, the amount of the premiums also depends on the desired amount of coverage and the scope of services. In the case of fire insurance, you also have the option of taking out non-contributory insurance if you subsequently convert it into residential building insurance for which a charge is made.
The cost of construction worker insurance depends on the number of helpers and whether you insure them only through BG Bau or also privately. Per helper, the statutory insurance costs at least 100 euros, the private insurance you get depending on the type of contract from 25 to 40 euros.
Liability insurance for undeveloped land is quite inexpensive: although the amount of premiums depends on the size of the property, you often pay less than 30 euros a year.
You often have the option to lower the cost of home construction insurance policies by paying a deductible. Also waiving certain services that are unimportant for you reduces the cost. However, always make sure that the agreed sum insured is sufficiently high!
Conclusion: House building insurances protect against bankruptcy
The various builder's insurances complement each other: environmental influences, carelessness, accidents, vandalism and theft can be insured. Damages for the builders themselves, but also for third parties are taken over. Overall, the cost of major home construction insurance policies is comparatively low for the high level of protection they provide for the entire construction period. Compare the different insurances thoroughly with each other and choose the ones that are suitable for your construction. This leaves you with the good feeling after completion that no damage on the site can jeopardize the project.