Builder's Risk Insurance: Illinois Compliance Guide

What is Builder's Risk Insurance?

Builder's Risk insurance (also called Course of Construction insurance) provides coverage for buildings under construction against damage from fire, weather, theft, and vandalism. In Illinois, this coverage is typically required by project owners, lenders, and general contractors before construction can begin.

Unlike general liability insurance, Builder's Risk specifically covers:

• The structure being built
• Materials and supplies on-site
• Temporary structures (scaffolding, fencing)
• Equipment and fixtures being installed
• Soft costs (additional interest, permit fees due to delays)

Illinois-Specific Requirements

While Illinois doesn't mandate Builder's Risk insurance by state law, practical requirements make it essential:

Common Coverage Gaps

Standard Builder's Risk policies often exclude or limit coverage for:

• Theft - May require proof of forced entry or have sublimits
• Vandalism - Coverage may be limited or excluded on unoccupied sites
• Employee theft - Typically excluded without separate coverage
• Materials not yet installed - May have lower limits for stored materials

These gaps are precisely where professional surveillance becomes valuable, both for prevention and for demonstrating due diligence to insurers.

How Surveillance Affects Insurance

Premium Reductions

Many insurers offer premium discounts for sites with professional surveillance. While discounts vary by carrier and project, common reductions include:

• 5-15% discount for 24/7 monitored surveillance
• Additional discounts for sites with documented security protocols
• Reduced deductibles on theft and vandalism claims
• Expanded coverage options that may otherwise be unavailable

Claims Support

When incidents occur, surveillance footage provides:

• Documentation of what was stolen or damaged
• Evidence of forced entry (often required for theft claims)
• Proof of security measures in place
• Support for police reports and investigations

Making the Business Case

Consider a typical $5 million commercial construction project in the Chicago area:

• Builder's Risk premium: $15,000 - $25,000 annually
• Potential premium reduction with surveillance: $1,500 - $3,750
• Average theft incident cost: $10,000 - $50,000
• Professional surveillance cost: $2,750/month ($33,000/year)

While the insurance discount alone may not justify surveillance costs, the combination of premium savings, prevented losses, and reduced deductibles typically provides positive ROI. More importantly, a single significant theft incident can cost far more than a year of surveillance coverage.

What Insurers Look For

When evaluating construction site security for underwriting purposes, insurers typically assess:

• Perimeter security - Fencing, gates, access control
• Surveillance coverage - Cameras, monitoring, documentation
• Lighting - Adequate illumination of storage and entry points
• Material storage - Locked containers, organized inventory
• Key control - Equipment keys removed overnight
• Site management - Regular inspections, visitor logs

Working with Your Insurance Broker

To maximize insurance benefits from your security investment:

1. Inform your broker about surveillance before policy binding
2. Request documentation of any applicable discounts
3. Ask about deductible reductions for monitored sites
4. Confirm coverage for theft and vandalism with surveillance in place
5. Keep records of surveillance deployment dates and specifications

Getting Started

Professional surveillance that meets insurance requirements doesn't have to be complicated. Mobile security trailers provide a turnkey solution that insurers recognize and accept, with documentation to support your coverage.

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