Should Builder Allow Owner To Provide Own Builders Risk On Custom Job?

I’m frequently asked if its OK for a custom builder to allow the owner to take out the Builders Risk policy?

Based on my experience this is very risky because I’ve seen problems arise when the contractor loses control of the transaction.

First, the owner may fail to procure coverage even if the building contract requires him to do so.

Second, the owner may purchase an inferior policy with unacceptable coverage problems that we’ll discuss in a minute.

I strongly recommend that the builder should always take out the Builders Risk policy to make sure that these common problems don’t arise. The builder could lose tens or hundreds of thousands of dollars and be put out of business if the owner makes a mistake and if a claim is not covered as a result.