Builders Risk Insurance 

Builders risk insurance helps protect your construction projects from physical loss or damage from a covered cause. Builders risk provides coverage for:

It can also help cover additional soft costs, or expenses not directly related to construction if property damage causes a delay in the project.  

Soft costs may include: 

• Lost sales 
• Insurance premiums  
• Rental income 
• Construction loan interest 
• Legal fees  
• Real estate taxes 
• Equipment rentals 

Some policies will include soft costs, and some might not. Speak with your agent to find out about your specific coverage.  

If you are building or renovating a property, you need builders’ risk insurance. This includes anyone with a financial interest in the property, such as: 

• Construction company
• Builder owner
• Architects or engineers involved in the project 
• Contractors or subcontractors 

When multiple parties go in on a construction project together, the general contractor will usually purchase the builders’ risk policy and act as the primary insured. The building owner and subcontractors will be listed as additional insureds. However, depending on what the contract says, the building owner might have to purchase the policy.  

Whether a residential or commercial, builders risk insurance provides broad coverage for a variety of project types including:  

• New Construction: Building a structure from the ground up.  
  • Residential (house, duplex, apartment or condo) 
  • Commercial (office building, restaurant, retail store) 

• Remodeling: Changes to an existing space beyond an installation.  
  • Residential (remodeling a kitchen or bathroom)  
  • Commercial (business expanding into an adjacent tenant space or updating the interior to a more modern look)  

• Installation: Installing a single fixture or feature (more of a limited scope compared to a complete remodel).  
  • Residential (new cabinets or replacing windows)
  • Commercial (new awning or signage)   

While a builders’ risk policy provides broad coverage there may be coverage exclusions. Depending on your risks you might be able to get extensions to help protect the project.  

Some causes of loss that are often excluded from builders’ risk insurance policies are:   

• Ordinary wear and tear  
• Mechanical breakdown 
• Employee theft
• Damage from earthquakes or flooding/water damage 
• Tools and equipment** 
• Acts of terrorism and war 
• Damage due to faulty design, planning, materials, or workmanship
• Rust and corrosion
• Company vehicle (consider a commercial auto insurance policy for this)
• Employee injuries (workers’ compensation helps cover your employees from work-related injuries)

**Tools and equipment are one exclusion that can vary from policy to policy. Know how your tools and equipment are protected under your policy by talking to an agent to find out what gaps you might have. 

*Coverages vary by state, offerings, and carriers. 

Builders’ risk policies also exclude damage that occurs after a project is finished. Once construction is complete, the coverage ends.

A basic builder’s risk insurance policy covers damage to property while it’s under construction or renovation.

This policy often includes coverage for the following types of property at the construction site:  

• Buildings and structures 
• Foundations 
• Fixtures 
• Machinery 
• Underground piping 
• Electrical work and wiring 
• Temporary structures 
• Building materials and supplies  
• Construction signs 

Depending on your unique situation and risks you may want to add coverage extensions to your policy.  

*Coverages vary by state, offerings, and carriers. 

Every construction project is different therefore customize your policy should fit your project’s specific needs. 

Common extensions include protection for: 

• Scaffolding 
• Construction forms 
• Temporary structures 
• Property in transit  
• Debris removal and disposal in the event of a loss 
• Pollutant cleanup 
• Sewer and drain backup 
• Fire department service charge
• Valuable papers (site plans, blueprints, etc.)