What is one of the unique challenges for projects under construction, related to builders risk?

One of the unique challenges for projects under construction associated with builders risk insurance is the change in insurable interest as the project develops. As construction progresses, various stakeholders may become involved, including contractors, subcontractors, and owners, each with distinct interests in the project.

Initially, the insurable interest may reside predominantly with the developer or owner of the property. As the project evolves, this interest can shift to different parties at various stages of completion. For example, when materials are delivered or when certain phases of construction are completed, the interest might transfer to contractors who are responsible for specific areas or systems. This fluidity can create complications in determining who is responsible for insurance claims if damage occurs and what coverage is applicable.

This dynamic nature of insurable interest makes it crucial for those involved in the construction project to keep insurance policies updated to reflect changes in who holds the risk at different phases of construction. This is why understanding this aspect of builders risk insurance is vital for managing risks effectively throughout the construction process.