Builder’s risk insurance

Builder’s risk insurance protects structures while they are being built, renovated, or remodeled. Standard property insurance usually does not cover buildings during construction, leaving projects financially exposed.

This coverage is designed to protect the value of materials, labor, and partially completed work.

What Is Builder’s Risk Insurance?

Builder’s risk insurance is a temporary property insurance policy that covers buildings and structures while construction is in progress. Coverage typically ends once the project is completed or occupied.

It is commonly used for new construction, renovations, and major remodeling projects.

What Does Builder’s Risk Insurance Cover?

Most builder’s risk policies cover:

• Buildings under construction

• Materials on-site and in storage

• Materials in transit to the job site

• Temporary structures such as scaffolding

• Fixtures and equipment being installed

Coverage applies to damage caused by covered perils during construction.

Common Covered Perils

Builder’s risk insurance commonly covers:

• Fire and explosions

• Theft and vandalism

• Wind and hail

• Lightning

• Certain water damage

Covered perils depend on policy terms and endorsements.

What Builder’s Risk Insurance Does Not Cover

Typical exclusions include:

• Employee theft

• Normal wear and tear

• Faulty workmanship or design

• Earthquakes and floods without endorsements

• Mechanical breakdown

Understanding exclusions helps avoid uncovered losses.

Who Needs Builder’s Risk Insurance?

This coverage is essential for:

• Property owners

• General contractors

• Builders and developers

• Commercial construction projects

• Residential construction projects

Anyone with a financial interest in a construction project may need this coverage.

Builder’s Risk Insurance vs General Liability

Builder’s risk insurance covers damage to the structure and materials.

General liability insurance covers third-party bodily injury and property damage claims.

Both policies are required for complete construction risk protection.

How Long Does Builder’s Risk Insurance Last?

Builder’s risk policies are temporary and usually last:

• Until construction is completed

• Until the building is occupied

• Until the policy expiration date

Coverage must be updated or converted to permanent property insurance after completion.

How Much Does Builder’s Risk Insurance Cost?

The cost depends on:

• Total completed value of the project

• Type of construction

• Project location

• Length of construction

• Coverage limits and deductibles

Costs are typically a small percentage of the total construction value.

Common Claims Covered

Common claims include:

• Fire damage during construction

• Theft of building materials

• Storm damage before completion

• Vandalism at unsecured job sites

Without builder’s risk insurance, these losses may not be covered.

How to Choose the Right Builder’s Risk Policy

To choose the right coverage:

• Insure the full completed value of the project

• Include materials on-site and in transit

• Add endorsements for flood or earthquake if needed

• Match policy duration to construction timeline

• Clearly define who is insured

Proper planning prevents coverage gaps.

Frequently Asked Questions

What is builder’s risk insurance?
It is temporary insurance that protects buildings and materials during construction.

Is builder’s risk insurance required by law?
No, but lenders and contracts often require it.

Does builder’s risk insurance cover theft?
Yes, theft of materials and fixtures is commonly covered.

Who should purchase builder’s risk insurance?
Property owners, contractors, or developers with financial interest in the project.

Does builder’s risk insurance cover tools?
No. Tools are usually covered under tools and equipment insurance.

When does builder’s risk insurance end?
It ends when construction is completed, the building is occupied, or the policy expires.

Final

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