Builder's Risk Insurance
A specialized property insurance policy that covers buildings under construction, renovation, or major repair. Protects the structure, materials on site, and sometimes materials in transit against covered perils during the construction period.
Builders risk insurance covers buildings while they are under construction, major renovation, or significant repair. Standard property policies often exclude or limit coverage during active construction, which is why builders risk exists as a separate form.
What It Protects
Builders risk responds to physical damage from fire, wind, hail, lightning, theft, vandalism, and certain other named perils. It covers the structure itself, temporary structures on site such as scaffolding or jobsite trailers, and materials intended to become part of the finished project. Many policies include limited coverage for materials in transit or temporarily stored off site.
What It Does Not Cover
Typical exclusions include flood, earthquake, employee dishonesty, faulty workmanship on the insured's own work, and contractor's tools and equipment (those are covered under inland marine or equipment policies). Earthquake and flood riders can be added where exposure warrants. Contractors should read the policy carefully because exclusions vary by carrier.
Who Buys It
On new construction, the owner typically buys builders risk and names the general contractor and major subcontractors as additional insured. On restoration projects, the owner's existing property policy may stay in force, but sometimes a builders risk form is written specifically for the reconstruction. The construction contract should say clearly who is responsible for buying the policy, what limits apply, and how claims are handled during the project.
Frequently asked questions
Either the property owner or the general contractor can purchase builders risk, depending on the contract. On new construction, the owner typically buys it. On restoration work, it varies. The contract should specify who carries the policy and who is named as additional insured.
Covered perils typically include fire, wind, hail, lightning, theft, and vandalism. Coverage extends to the structure under construction, temporary structures on site, and materials intended to become part of the project. Earthquake, flood, and some other perils usually require separate coverage.
Coverage typically ends at the earlier of: the owner taking occupancy, the project being substantially complete, or a specified term (often 6 or 12 months, sometimes extendable). Once builders risk ends, the permanent property policy takes over for post-construction coverage.
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