Builders Risk Insurance for Contractors

What builders risk insurance is

Builders risk, also called course-of-construction insurance, is property coverage for eligible physical loss or damage to a building or other covered property during construction. The project owner, general contractor, or another party with a financial interest may arrange coverage. Who buys it and who is named on the policy can vary by contract and project.

What it may protect

Depending on the policy and endorsements, covered property may include the structure under construction and materials, fixtures, or equipment intended to become part of it. Some policies can include materials in transit or temporary structures, but those items and locations need to be addressed in the coverage terms.

• A fire damages a partly framed commercial building.
• Covered materials stored at the project site are stolen or damaged by a covered event.
• A contractor installs new cabinets as part of a covered renovation and the installed work is damaged by a covered event.

Examples for contractors

A general contractor building a new office, a remodeler changing an existing property, or a trade contractor installing fixtures may have an insurable interest in project property. For a renovation, ask whether the existing building is included or excluded. Confirm whether the policy applies to the specific phase of work, property, and locations involved.

Limits and exclusions to check

Builders risk is not general liability insurance. It does not generally cover bodily injury claims or a contractor’s liability to others. Coverage is limited to eligible physical loss or damage under the policy; it does not automatically insure every project cost or delay.

Coverage forms differ. Flood, earthquake, wind-related risks, theft conditions, faulty workmanship, and the cost to correct defective work may be restricted or excluded, though some policies may offer endorsements or cover resulting damage in specified circumstances. Check the policy’s covered causes of loss, limits, deductibles, exclusions, start and end dates, and any requirements for materials in transit or stored off-site.

What can affect the cost

Pricing depends on the project and the selected coverage. Insurers may consider the project type and value, location, construction materials, duration, existing-structure exposure, coverage limits, and requested extensions. A quote is specific to the risk presented; no single price or coverage form applies to every project.

What to prepare for a quote

Gather project information before requesting terms. If a contract, lender, or property owner specifies insurance requirements, provide those requirements so the proposed coverage can be compared with them.

• Project address, description, type of work, and expected construction dates.
• Estimated completed value, including the materials and labor to be insured.
• Construction type, project stage, and details of any existing structure.
• Where materials will be kept, including transit or temporary storage, and any requested coverage extensions.
• The contract’s insurance language and the names of parties that may need to be listed as insureds or loss payees.