In builders risk, what are soft costs typically associated with?

In builders risk insurance, soft costs refer to the indirect expenses that arise during the construction process but are not linked directly to physical construction activities. These costs can include a variety of fees and expenses such as architectural and engineering fees, insurance, financing costs, and even permits required for the project. Soft costs are incurred when construction is delayed or when there are other unforeseen circumstances that affect the timeline of the project, leading to additional expenditures that are not directly related to labor or materials.

When considering the other options, construction materials are a direct cost associated with the tangible items needed for building, while temporary structures are also classified as physical assets. Labor costs pertain directly to work performed, which again makes them a hard cost rather than a soft cost. Thus, soft costs are recognized for their role in overall project delay and management, highlighting the significance of proper coverage in builders risk policies to account for these indirect financial impacts.