Builder’s Risk
Property Coverage During Construction
What Does Builder’s Risk Insurance Do?
Builder’s Risk can help protect qualifying structures, building materials, and other insured property during the course of construction. Coverage typically begins before or near the start of the project and continues until a defined completion, occupancy, expiration, or other policy-ending event.
The Structure
Work in Progress
Coverage may apply to qualifying buildings and structures while they are being constructed, expanded, or substantially renovated.
Materials
Materials & Supplies
Qualifying lumber, fixtures, roofing materials, electrical components, HVAC equipment, cabinetry, and other materials intended for the project may be included.
Project Investment
Financial Protection During the Build
A covered loss can create repair costs, replacement expenses, and project delays before the contractor reaches completion.
The Project Changes Every Day
Construction Property Has a Different Risk Profile Before Completion
Walls may be open, security may be temporary, materials can be stored onsite, multiple trades may be working simultaneously, and the permanent building systems may not yet be operational.
Fire
Construction activities, temporary electrical systems, hot work, and unfinished fire protection can create significant loss potential.
Theft
Building materials, fixtures, copper, appliances, and equipment may be attractive theft targets before installation or completion.
Vandalism
Unoccupied construction sites may be vulnerable to intentional property damage or unauthorized access.
Weather & Accidental Damage
Wind, storms, falling objects, and certain accidental events may damage unfinished structures or exposed materials.
New Construction & Major Renovation
Builder’s Risk Is Not Only for Ground-Up Construction
Depending on the project and insurance company, coverage may be available for several types of construction work.
Ground-Up Construction
Residential, commercial, and other qualifying buildings constructed from the ground up.
Major Renovations
Substantial remodeling, additions, structural changes, and renovation projects may require specialized course-of-construction coverage.
Project-Specific Coverage
The policy is generally structured around a specific construction project, location, estimated completed value, and construction period.
Starting a New Project?
Builder’s Risk Should Be Addressed Before Construction Gets Too Far Along
Coverage timing matters. Waiting until work is already underway may create underwriting problems or leave earlier construction activity outside the policy period.
Know What the Policy Is Designed to Protect
Common Builder’s Risk Coverage & Important Limitations
Builder’s Risk policies vary significantly by insurance company and project type. The actual policy should always be reviewed for covered property, causes of loss, extensions, exclusions, limits, and deductibles.
Commonly Considered
Property That May Be Covered
• Building or structure under construction
• Qualifying building materials and supplies
• Fixtures awaiting installation
• Temporary structures, fencing, or scaffolding where included
• Certain materials in temporary storage
• Certain property in transit where endorsed or included
• Additional project-related extensions when specifically provided
Do Not Assume Everything Is Included
Common Exclusions or Limitations
• Faulty design, workmanship, or materials may be limited or excluded
• Employee theft may require separate protection
• Work vehicles are generally insured elsewhere
• Mechanical breakdown may be excluded
• Wear, deterioration, rust, or corrosion
• Flood may require separate coverage
• Earthquake may require separate coverage or endorsement
More Than One Party May Have Money at Risk
Who Has an Interest in the Builder’s Risk Policy?
Construction projects can involve several parties with financial or contractual interests in the unfinished property.
General Contractors
Contractors coordinating the work may have contractual responsibilities for the project, materials, and construction progress.
Property Owners
Owners have a direct financial interest in protecting the building and construction investment.
Developers
Developers may have substantial capital committed to a project before the structure is complete or producing income.
Lenders
Construction lenders may require evidence of Builder’s Risk coverage to protect the property supporting the loan.
Do Not Assume Someone Else Bought It
The Construction Contract May Decide Who Is Responsible
Depending on the project, the owner, general contractor, developer, or another party may be responsible for obtaining Builder’s Risk. The contract should be reviewed before work begins.
Who Must Purchase It?
Construction agreements may assign responsibility for arranging the Builder’s Risk policy.
Who Must Be Protected?
Contracts may require owners, contractors, subcontractors, lenders, or others to have an insured interest under the policy.
What Value Should Be Insured?
Builder’s Risk is commonly based on the completed value of the insured construction project rather than simply the amount spent to date.
Coverage Has a Beginning and an End
Builder’s Risk Is Temporary Coverage for a Changing Project
The policy is designed around the construction period. Contractors should pay close attention to when coverage begins, what can terminate it, and whether construction delays require an extension.
Before Work Starts
Determine who is responsible for arranging coverage.
Construction Begins
The insured value grows as labor and materials are incorporated.
Project Changes
Major value, scope, timeline, or occupancy changes should be reviewed.
Completion
Coverage may end based on completion, occupancy, expiration, sale, or another policy condition.
Contractor Builder’s Risk Learning Center
Learn More About Protecting Construction Projects
Explore practical guides about choosing the right project value and understanding exactly when Builder’s Risk coverage should begin and end.
Project Value
How Much Builder’s Risk Insurance Does a Construction Project Need?
Learn why Builder’s Risk is often based on the anticipated completed value of the project and why materials, labor, project changes, and construction costs can affect the limit.
Understand Project Value →
Coverage Timing
When Does Builder’s Risk Insurance Begin & End?
Understand how construction start dates, occupancy, completion, policy expiration, delays, and other project milestones can affect when Builder’s Risk coverage applies.
Review Coverage Timing →
Project Cost or Timeline Changed?
The Builder’s Risk Policy Should Keep Up With the Project
Construction delays, increased material costs, change orders, additional structures, or early occupancy can affect the coverage that was originally arranged.
Contractor Builder’s Risk Questions
Builder’s Risk Insurance FAQs
Clear answers about Course of Construction coverage, project value, materials, renovations, timing, property owners, general contractors, lenders, exclusions, and construction changes.
Protect the Project Before the Finish Line
Keep a Construction Loss From Becoming a Project Financial Crisis
Best Formula Insurance can help contractors explore Builder’s Risk options for qualifying new construction, renovations, building materials, structures in progress, project-specific exposures, and other construction property risks.
Important: This page provides general insurance information and does not provide legal, contractual, construction, architectural, engineering, financial, or risk-management advice and does not modify, expand, guarantee, or confirm insurance coverage, eligibility, pricing, contract compliance, project completion, or claim payment. Builder’s Risk and Course of Construction coverage varies by insurance company, state, project type, construction type, completed value, renovation exposure, occupancy, project duration, security, fire protection, location, and individual circumstances. Coverage for structures, materials, supplies, temporary structures, property in transit, temporary storage, theft, vandalism, ordinance or law, soft costs, delay expenses, equipment, flood, earthquake, faulty workmanship, design defects, mechanical breakdown, employee theft, and other exposures may be limited, excluded, subject to deductibles or sublimits, or require specific endorsements or separate coverage. Policy termination may be affected by occupancy, completion, expiration, sale, abandonment, or other policy-defined conditions. All coverage is subject to applicable law and the terms, conditions, definitions, exclusions, limits, deductibles, endorsements, schedules, and requirements of the issued policy.