Safeguard your property as the project is being built with builders risk insurance.
Under construction? You might need this coverage.
Builders risk insurance is effectively a form of property insurance that covers the period while the property is still under construction. It’s possible for the property owners to take out such a policy, though more commonly it will be a policy they insist that the contractors take out.
What builders risk insurance covers.
The key areas of coverage are damage caused by events such as fire and hail storms. You’ll also normally be covered for theft, vandalism (though not typically by your employees), and damage caused by vehicles or aircraft hitting the building. To make sure coverage levels are adequate, policies are often set at a fixed percentage of the total construction budget. You’ll need to check how long the policy lasts, as it typically won’t allow repeated extensions of the construction timeline.
What types of coverage are included with a builders risk policy?
This policy typically includes coverage for the building itself, general liability, equipment breakdown, as well as ordinance and law.
Do you need builders risk insurance?
Whether you are the client or the contractor building the project, this is important coverage to have. Property owners, contractors, subcontractors, lenders, and architects will most commonly get this coverage.
Coverages that are not included.
It’s important to be aware of what insurance doesn’t cover. Unless specifically stated, it won’t cover specific increased risks such as flooding on a beachfront construction or earthquakes near a fault line. It also doesn’t cover injuries suffered by workers, meaning you’ll still need any legally required workers’ compensation insurance coverage, as well.
Do you need builders risk insurance to protect your property while under construction? Contact us to go over the unique needs of your property and the coverage options available to you.
Builders Risk Insurance
What is the difference between builders risk insurance and a standard commercial property policy?
Builders risk insurance is a short-term policy written for the construction period, while a standard commercial property policy provides ongoing coverage for a completed building in normal operation. Builders risk generally ends when the project is finished, occupied, or the policy term expires, whichever comes first, and the property typically needs a commercial property policy in place before it’s put to its intended use. Because the exact transition point can vary by carrier, confirm the changeover date with your agent ahead of completion to avoid a gap between the two policies.
What happens if my construction project takes longer than the builders risk policy term?
Coverage generally doesn’t extend automatically if a project runs past the policy expiration date, and any damage or theft after that point typically won’t be covered. Some insurers will allow an extension, but it must be requested before the original policy expires and usually requires proof of progress, an explanation for the delay, and sometimes an additional premium. Reviewing your project timeline with your agent well before expiration is the best way to avoid that gap.
What factors affect the cost of builders risk insurance?
Cost generally comes down to the project’s total value, the construction type and materials used, the job site’s location, and how long the build is expected to take. Weather-prone locations and higher-risk materials tend to push premiums up, and optional add-ons like soft costs or equipment breakdown coverage also add to the price. Material and labor costs can also shift from year to year, so a fresh quote is the most reliable way to know what a specific project will actually cost.
Does builders risk insurance cover renovation projects, or only new construction?
Generally, builders risk insurance covers both new construction and renovations, though renovation coverage works a bit differently. It needs to account for the value of the existing structure and the new work, since the building is at risk throughout the project. If you’re planning a renovation, mention that scope early when requesting a quote.
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