Insurance & LiensQuestion 574 of 690
A general contractor is the named insured on a builder's risk policy for a custom home. The property owner asks why their own homeowner's policy is not enough. Which statement is the BEST explanation?
a.Homeowner's policies always cover construction projects automatically
b.Builder's risk is only required when the project exceeds $1 million
c.A homeowner's policy covers third-party injuries; builder's risk covers lawsuits
d.Standard homeowner's policies generally exclude or sharply limit coverage for property under construction
Explanation
Most standard homeowner's policies either exclude or sharply restrict coverage for new construction and renovation in progress. A builder's risk policy is purpose-built for the construction phase and covers materials, fixtures, and the structure itself against physical loss until the project is complete.
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