What happens to Builders Risk coverage when construction is abandoned?

Builders Risk coverage is specifically designed to protect buildings under construction from various types of risks, such as fire, theft, or vandalism, until the construction is completed and the property is occupied. When construction is abandoned, the insurance policy generally has provisions that state coverage ceases at that point. This is because the risk profile changes significantly when a construction project is not being actively managed or completed.

Abandonment can lead to increased risks, such as unauthorized access or deterioration of the unoccupied structure, which are not within the intended scope of the policy. Therefore, once construction is deemed abandoned, the insurer typically has the right to discontinue coverage, as the risks associated with abandonment diverge from the original purpose of the Builders Risk policy.

This understanding highlights the importance of maintaining clear communication with the insurer regarding the status of the construction project and any changes that may occur, ensuring that coverage adequately reflects the current risk exposure.