Builder's risk insurance from groundbreaking to occupancy
A building under construction is exposed to fire, weather, theft and vandalism before it has walls, alarms or tenants. Builder's risk covers the structure and materials while the project is underway. We place it for owners, developers and contractors on projects from spec homes to commercial buildings.
Anyone with a financial stake in the project
Builder's risk is typically bought by the property owner, the general contractor or the developer, depending on the contract. Other parties with an interest, such as lenders, subcontractors and construction managers, can be named as insureds.
Spec and custom home builders
Single homes and tract projects, often on a per-project or reporting basis.
Commercial developers
Multifamily, retail, office and mixed-use projects with lender requirements.
General contractors
When the contract makes the contractor responsible for insuring the work.
Remodelers
Renovations and additions, where coverage for the existing building needs separate attention.
Property owners
Owners building for their own use who control the insurance on the project.
Lenders
Construction lenders named as loss payee or mortgagee on the policy.
What a builder's risk policy can include
Most builder's risk policies are written on an open-perils basis, meaning a loss is covered unless excluded. Forms, sublimits and exclusions vary by carrier and policy.
Structure under construction
The building or project as it is built, typically insured to its completed value.
Materials and supplies
Materials intended for the project on site. Many forms extend to materials in transit and in temporary off-site storage; confirm limits for each.
Temporary structures
Scaffolding, falsework, forms and construction trailers, as scheduled.
Debris removal
Cost to clear debris after a covered loss, usually subject to a limit.
Ordinance or law
Added cost to rebuild to code after a covered loss, often by endorsement.
Soft costs
Added costs from a covered delay, such as construction loan interest, real estate taxes, permit and bond fees, architect and legal fees, and insurance.
Delay in completion / loss of rents
Rental or business income lost because a covered loss pushes back the opening date.
Faulty workmanship, design and materials
The cost to fix the faulty work itself is generally excluded, though resulting damage to other property may be covered under an ensuing-loss provision.
Earthquake and flood
Usually excluded or sublimited and sometimes available by extension.
Wear, corrosion and breakdown
Wear and tear, rust, corrosion and mechanical breakdown.
Employee theft, war and terrorism
Typically excluded; terrorism may be available separately.
When coverage starts and ends
Builder's risk is temporary coverage. It typically begins when the contract is signed or work starts and ends at the earliest of the policy expiration, the building being occupied or put to its intended use, or completion and acceptance of the project. If the project runs long, ask to extend the policy before it expires.
Watch the transition at the end. Once the building is occupied, builder's risk coverage generally stops and the owner's permanent property policy needs to be in place. Partial occupancy, such as tenants moving into a finished floor while upper floors are still under construction, should be cleared with the carrier in advance.
For renovations, the existing building is often not covered by builder's risk unless it is specifically included. The owner's property policy may also restrict coverage during major renovation, so both policies need to be reviewed together.
How a project loss unfolds
Three illustrative examples with round, hypothetical figures.
A framed apartment building burns
A fire starts overnight in a four-story wood-framed building under construction. Framing and stored lumber are destroyed and the opening moves back five months.
- Framing and materials$2,200,000
- Debris removal$150,000
- Loan interest and fees during delay$400,000
- Lost rents during delay$250,000
Illustrative example. Real outcomes depend on the facts and your policy terms.
Setting up a builder's risk policy
Read the contract
Construction and loan agreements usually say who buys builder's risk, which parties must be named and what deductible and perils are required.
Gather project details
Completed value, construction type, schedule, location, site security and any soft cost or delay exposure.
Compare markets
We compare carriers on perils, sublimits for transit and storage, water and wind deductibles and the faulty-work wording.
Manage to completion
Extensions if the schedule slips, partial-occupancy approvals and a hand-off to permanent property coverage.
Builder's risk questions
Who should buy builder's risk, the owner or the contractor?
Whoever the contract assigns. Owners, general contractors and developers all buy it. What matters most is that one policy covers the full project and names every party with an insurable interest, so there are no gaps or duplicate policies.
Does builder's risk cover injuries on the job site?
No. Builder's risk is property coverage. Injuries to the public are a general liability matter, and injuries to workers are covered by workers' compensation.
Does it cover my tools and equipment?
Generally not. Contractors' tools and equipment are typically covered under an inland marine equipment floater.
Is faulty workmanship covered?
The cost to correct faulty workmanship, design or materials is generally excluded. Many policies cover resulting damage to other property, and the wording varies widely between carriers.
What value should the policy use?
Most policies are written at the project's completed value, including labor and materials. Underinsuring can reduce what the policy pays. Land value is not insured.
Does it cover remodels and additions?
It can, but the existing structure is often excluded unless specifically included. We review the builder's risk and the owner's property policy together for renovation projects.
What happens if the project runs past the policy term?
Coverage ends at expiration unless the policy is extended. Ask for an extension before it expires; carriers may charge an additional premium.
Get a builder's risk quote
Send the project address, completed value, construction type and schedule. We'll compare carriers and terms.
Coverage descriptions are general summaries for education. They are not legal, tax or coverage advice, a statement of coverage, an offer or a binder. Scenarios and dollar figures are illustrative examples, not representations about any business. Coverage, limits and eligibility are governed by the terms, conditions and exclusions of the policies issued and are subject to underwriting.