New York Builder’s Risk Insurance is a common requirement for most construction projects, particularly when securing funding from a bank or lending institution. Most lenders will ask prospective builders for proof of builder’s risk before approving a loan.
Of course, not all builders and would-be homeowners need to take out loans to finance their planned construction projects. Some may have sufficient funds saved up or have other means to pay for the related costs. For these individuals, builder’s risk insurance may seem like an unnecessary expense.
But on the contrary, builder’s risk is just as essential for self-funded projects as it is for commercial construction. If anything, it might actually be more critical, considering the potential for risk and the losses that may result from such projects.
Furthermore, self-funders will likely use their own money to pay for the costs of construction. If something were to happen to the project, the financial toll could be devastating‒much more so than if a loan funded the construction.
Despite the many good reasons to obtain builder’s risk insurance, some homeowners and contractors may still be reluctant to get the necessary coverage. Some may have considerable experience in the construction industry and have not experienced any losses thus far. Others may not be willing to spend more money, particularly for insurance coverage they feel they don’t need.
These are the people you have to convince of the importance of builder’s risk. As an insurance broker, you need to be prepared to field their questions and address any concerns they may have about builder’s risk insurance. Read on to find out how to do that.
Three tips for selling builder’s risk to self-funded firms
Here’s the scenario: you are trying to convince your client that getting builder’s risk is in their best interests. But they are reluctant to do so because of an extensive history of trouble-free completed projects or budgetary constraints. How do you convince them to sign up? Here are some strategies you could employ:
Ask “what if?” questions
“What if” questions can be very effective at encouraging prospective clients to consider every possibility and to look at the situation from every angle. Your goal here isn’t to paint a doomsday scenario that will scare your client into getting builder’s risk insurance.
Instead, you want to present a rational and compelling argument about why builder’s risk is so important. Be realistic and know the circumstances of the project to paint a more convincing picture.
If necessary, look into statistics and project histories in the area, especially those relevant to the project at hand. Frame your argument correctly, and your client will be convinced that builder’s risk is not only necessary but indispensable.
Focus on value instead of cost
Builders and homeowners are always looking for value when embarking on a self-financed construction project. Or at least they would be if they want to get their money’s worth. Therefore, one of the most compelling ways to convince them of the necessity of builder’s risk insurance is by focusing on value rather than cost.
It might be beneficial to work with your clients closely and find ways to shuffle their budgets to accommodate builder’s risk insurance premiums. You might also convince them that such a move would be beneficial in the long-term, as having proof of builder’s risk could help them secure a loan if their funds dry up at some point during construction.
Broaden your range of prospects
Finally, try to adopt a proactive approach toward reaching out to potential clients. Find out who is currently planning to remodel their home or build a new structure from scratch. Any of these prospective builders could be potential clients for whom builder’s risk is absolutely essential.
It might also be worth spending time and effort researching permits in your community, joining homeowners groups, and expanding your real estate network. These strategies could help you identify prospective clients that are more likely to be convinced of the need to secure builder’s risk coverage.
Builder’s risk is just as essential for self-funded builders and homeowners as it is for commercial builders. But convincing self-funders of the need for such insurance can be challenging. However, with the tips and information we have shared in this article, you can hopefully encourage your clients to take advantage of the opportunities offered by builder’s risk.
About Snyder Specialty
Snyder Specialty, LLC is a New York-based underwriting facility that provides a range of property and liability solutions for personal and commercial lines. Specializing in coastal properties and hard-to-place risks, Snyder Specialty expands your current capabilities with proven solutions for complex risks. Find out more about the company’s range of services by calling (718) 362-8039.
