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VGD: Navigating Builders Risk Insurance Disputes in Denver.

Vargas Gonzalez Delombard, LLP offers decades of experience, legal expertise, and an unmatched commitment to protecting our clients’ rights in builder's risk insurance disputes. Our deep understanding of Colorado insurance laws, construction policies, and insurer tactics allows us to advocate effectively for policyholders facing wrongful denials or undervalued claims. We meticulously analyze policy terms, gather compelling evidence, and negotiate aggressively to ensure our clients receive the full compensation they are entitled to. Don’t let insurance companies dictate the outcome of your claim—secure the experienced legal representation you need. Schedule a consultation today, and let us fight for your construction investment.

What is Builder’s Risk Insurance?

Builder’s risk insurance is a critical form of coverage designed to protect property owners, contractors, and subcontractors from financial loss during construction projects. Whether the project is new or renovated, this temporary policy protects against damage caused by unforeseen events. Given the significant financial investments involved in construction projects, builder's risk insurance is essential for safeguarding materials, labor costs, and ongoing work. However, obtaining compensation from insurance companies for builder's risk claims in Denver can be complex and frustrating.

Policyholders often face delays, denials, or undervalued claims, leaving them to shoulder massive financial burdens. You have legal options if you are dealing with a builders' risk insurance dispute. Under Colorado Revised Statutes § 10-3-1115, insurers are prohibited from unreasonably delaying or denying payment of claims for benefits owed to first-party claimants. Additionally, § 10-3-1104 outlines unfair claim settlement practices, including failing to adopt and implement reasonable standards for prompt claims investigation. These statutes mandate that insurers handle claims fairly and timely, making legal intervention essential when facing wrongful denials.

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What Builder’s Risk Insurance Covers in Denver

The coverage provided by a builder’s risk policy varies depending on the terms of the agreement. Generally, these policies cover losses resulting from the following:

  • Fire
  • Theft
  • Vandalism
  • Wind and hail damage
  • Explosions
  • Lightning
  • Faulty design (if covered by additional endorsements)
  • Damage from vehicles or aircraft
  • Labor and material costs for repairs

Common Builder’s Risk Insurance Disputes

Insurance companies may dispute or deny claims for various reasons, including ambiguous policy language and complex valuation methods. Some of the most common challenges policyholders face include:

Claim Denials for Covered Perils

Insurers may wrongfully deny claims for events such as fire, theft, or vandalism, arguing that the damage is not covered or was pre-existing.

Undervalued Damage Estimates

The insurer may provide an estimate far below the actual cost of repairing or replacing damaged property, potentially jeopardizing the project.

Delayed Payments

Construction projects operate on strict timelines, and insurance companies may slow down the claims process, causing costly project delays and financial hardship.

Exclusions and Limitations

Many policies have exclusions for specific perils, and insurance companies may attempt to broaden these exclusions unfairly to avoid payouts, requiring legal scrutiny of policy terms. These are further discussed below.

Disputes Over Project Completion Dates

If damage occurs near the completion of a project, insurers may argue that coverage no longer applies, creating costly legal battles for project owners and contractors.

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Exclusions and Limitations

While builder’s risk insurance offers broad coverage, it typically excludes certain types of damage unless specific endorsements are added. Common exclusions include:

  • Flood damage
  • Earthquakes
  • Employee theft
  • Normal wear and tear
  • Defective workmanship
  • Pre-existing damage

Policyholders must thoroughly review their policies to understand the limitations and secure additional coverage where necessary. Many claims are denied based on exclusions that could have been addressed with additional riders or endorsements.

How Insurance Companies Undermine Claims

Denver insurance providers often use various tactics to minimize or deny builder’s risk insurance claims. Some common strategies include:

  • Claiming Insufficient Documentation: Insurers may argue that policyholders failed to provide adequate proof of loss, even when comprehensive records exist.
  • Arguing That Damage Falls Under Exclusions: Adjusters may cite fine print in policies to exclude valid claims, requiring experienced legal intervention to dispute these interpretations.
  • Delaying the Investigation Process: Insurance companies may drag out investigations to pressure policyholders into settling for less or abandoning their claims altogether.
  • Offering Lowball Settlements: Insurers may provide settlements that do not cover the full extent of damages, forcing policyholders to accept less than they deserve or engage in lengthy legal disputes.
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Steps to Take if Your Builder’s Risk Claim Is Denied

If your builder’s risk insurance claim has been denied or undervalued, follow these steps to protect your rights:

Request a Written Explanation

Ask your insurer for a detailed reason for the denial, which will help identify potential bad faith actions.

Gather Documentation

Collect contracts, photos, invoices, and reports related to the damage to ensure a strong case.

Consult an Attorney at VGD

Legal experts can evaluate your case, identify violations of Colorado insurance laws, and determine the best course of action. Our attorneys have a proven track record of holding insurance companies accountable and maximizing claim recoveries for policyholders.

Challenge the Decision

Attorneys can negotiate aggressively or file a lawsuit if the insurer refuses to honor the policy.

Why You Need Legal Representation for Builder’s Risk Claims

When facing a builder’s risk insurance dispute, having an experienced legal team on your side is crucial. Our attorneys at Vargas Gonzalez Delombard, LLP, have extensive experience handling builder’s risk insurance claims in Denver. We assist clients by:

  • Reviewing and interpreting policy language to determine coverage eligibility
  • Gathering evidence and documentation to support claims
  • Negotiating with insurance companies to secure fair settlements
  • Filing lawsuits when insurers act in bad faith
  • Navigating Colorado’s insurance regulations to ensure compliance and maximize claim recovery
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Protect Your Construction Investment with Expert Legal Advocacy from Vargas Gonzalez Delombard, LLP

Builder’s risk insurance disputes can jeopardize entire construction projects, causing significant financial strain and delays. Policyholders have the right to expect insurers to uphold their contractual obligations. At Vargas Gonzalez Delombard, LLP, our legal team is committed to protecting your investment and holding insurance companies accountable. We leverage our extensive experience, legal acumen, and in-depth understanding of Colorado insurance laws to ensure our clients receive the full benefits of their policies. Our firm has a proven track record of successfully resolving complex builder’s risk claims, from pre-litigation negotiations to court trials when necessary. 

We provide strategic guidance to prevent coverage disputes before they arise and aggressively pursue justice when insurance companies fail to act in good faith. With Vargas Gonzalez Delombard, LLP by your side, you can ensure that your builder’s risk insurance claim is handled fairly, efficiently, and in accordance with Colorado law. Contact us today for a consultation, and let us help you protect your construction investment in Denver.

Builder's Risk Insurance FAQs

Can Builder’s Risk Insurance Cover Soft Costs Due to Delays?

Is Builder’s Risk Insurance Required by Law in Denver?

Who Is Responsible for Purchasing Builder’s Risk Insurance?

Can I Modify My Builder’s Risk Policy Mid-Project?

What Happens If I Don't Have Builder’s Risk Insurance?

Does Builder’s Risk Insurance Cover Subcontractors' Materials?

What Is the Difference Between Builder’s Risk Insurance and General Liability Insurance?

How Long Does Builder’s Risk Insurance Last?

Can Builder’s Risk Insurance Cover Soft Costs Due to Delays?

Yes, some policies cover soft costs such as lost rental income, additional loan interest, and administrative expenses caused by construction delays due to covered damages. However, this must be explicitly included in the policy or through additional endorsements.

Is Builder’s Risk Insurance Required by Law in Denver?

Builder’s risk insurance is not legally required in Denver, but lenders and project stakeholders often mandate it as part of construction contracts to protect the project's financial interests.

Who Is Responsible for Purchasing Builder’s Risk Insurance?

The responsibility for purchasing a builder’s risk policy varies depending on contract agreements. Typically, the property owner or general contractor secures coverage, ensuring that all relevant parties, including subcontractors, are insured.

Can I Modify My Builder’s Risk Policy Mid-Project?

Yes, you can often modify a policy mid-project to reflect changes such as extended completion timelines, increased construction costs, or additional coverage for new risks. However, this typically requires an endorsement and additional premium costs.

What Happens If I Don't Have Builder’s Risk Insurance?

Without builder’s risk insurance, any damages to the project—including fire, theft, or weather-related losses—may result in out-of-pocket expenses for repairs or replacements, significantly impacting project timelines and financial stability.

Does Builder’s Risk Insurance Cover Subcontractors' Materials?

Yes, if the policy includes subcontractors as insureds, it may cover materials stored on-site or in transit. However, subcontractors should verify whether they need separate insurance for their materials and equipment.

What Is the Difference Between Builder’s Risk Insurance and General Liability Insurance?

Builder’s risk insurance covers property damage to the construction project itself, whereas general liability insurance covers third-party injuries and property damage unrelated to the project’s structure.

How Long Does Builder’s Risk Insurance Last?

Coverage typically lasts until the project reaches completion and the Certificate of Occupancy is issued. If the project extends beyond the estimated timeline, policyholders may need to request an extension.

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