How does new construction affect commercial property insurance?

New construction can significantly impact commercial property insurance because it often introduces unique risks that are not present in fully operational properties. When a new building is under construction, there are several considerations that insurers take into account, such as the risk of accidents on-site, the potential for damage to the structure before it is completed, and the need for additional coverages, such as builder's risk insurance.

Builder's risk insurance, which is commonly required during the construction phase, provides coverage for property that is under construction and includes protection against losses due to fire, theft, and certain types of damage. This type of coverage is critical because conventional property insurance typically does not cover structures that are not yet complete.

Additionally, until the property is fully operational, there may be other interim coverage options that need to be considered to protect against possible liabilities and risks emerging during construction. Therefore, it is essential for property owners and developers to assess their insurance needs carefully during the construction process and secure appropriate coverage to ensure adequate protection for their investment.