Builder’s Risk for Contractors

Protect the Project While It Is Being Built

Builder’s Risk Insurance

Protect new construction, remodeling projects, building materials, and eligible property during the course of construction.

A fire, theft, windstorm, vandalism, or other covered loss can damage months of work and create expensive project delays. Builder’s Risk can help protect the financial investment behind the project.

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Builder’s Risk FAQs

Contractor reviewing plans at an active residential construction project.

Course of Construction Protection

Coverage That Follows the Project’s Growing Value

The Structure

Coverage may include the building or structure while it is being constructed, renovated, remodeled, or expanded.

Materials and Supplies

Eligible construction materials, supplies, and equipment intended to become a permanent part of the completed project may be covered.

Project Investment

Coverage can help protect eligible labor, materials, and other insured project costs following a covered physical loss.

Residential structure progressing through multiple stages of construction.

Protection During Construction

What Is Builder’s Risk Insurance?

Builder’s Risk, also called course-of-construction insurance, is specialized property coverage for a building or project while construction is underway.

It may be purchased by a property owner, developer, general contractor, custom-home builder, investor, or another party with a financial interest in the project. The construction contract or lender may specify who must obtain the policy.

New Construction

Ground-up residential, commercial, industrial, mixed-use, and other eligible construction projects.

Renovations and Remodeling

Major remodeling, additions, tenant improvements, structural alterations, and qualifying renovation projects.

Installation Projects

Certain materials, systems, and property awaiting installation may require Builder’s Risk or a separate installation floater.

Insurable Interest in the Project

Who May Need Builder’s Risk Insurance?

Several parties can have a financial interest in a construction project. The policy should be structured to reflect the contract, ownership, financing, and responsibilities of the parties involved.

Property Owners

Owners building a new home, commercial building, rental property, addition, or major renovation.

General Contractors

Contractors responsible for the project, materials, construction schedule, or contractual insurance requirements.

Developers and Investors

Developers, real-estate investors, and entities financing or managing construction and redevelopment projects.

Custom-Home Builders

Builders constructing homes for sale, under contract, or on behalf of individual property owners.

Lenders

Banks and construction lenders may require evidence of coverage to protect their financial interest in the project.

Specialty Contractors

Trade contractors responsible for high-value materials, systems, or installations may need project-specific coverage.

Property Under Construction

What a Builder’s Risk Policy May Protect

Coverage varies by carrier and policy form. The property, location, transit exposure, storage arrangements, and project responsibilities must be accurately reported.

The Building or Structure

The structure being constructed, remodeled, expanded, or renovated at the insured project location.

Construction Materials

Lumber, roofing, drywall, flooring, windows, fixtures, cabinetry, wiring, plumbing materials, and other eligible supplies.

Property Awaiting Installation

Eligible equipment, fixtures, appliances, systems, and materials that are intended to become a permanent part of the project.

Temporary Structures

Certain scaffolding, fencing, temporary structures, forms, signs, and project property when included by the policy.

Materials in Transit

Construction materials moving to the jobsite may be covered when transit coverage is included with an adequate limit.

Materials at Temporary Storage

Eligible materials stored away from the jobsite may require off-site storage coverage and a specifically selected limit.

Unexpected Construction Losses

Examples of Losses That May Be Covered

The policy must be reviewed carefully because covered causes of loss, exclusions, deductibles, sublimits, and endorsements vary.

Fire and smoke damage

Theft of covered materials

Vandalism

Wind and hail

Lightning

Explosion

Certain water damage

Certain collapse losses

Flood, earthquake, earth movement, named storm, water intrusion, theft, and other catastrophe coverage may be excluded, limited, subject to special deductibles, or available only by endorsement.

Contractor safely documenting moderate wind damage at a construction project.

Beyond Physical Repairs

Consider Soft Costs and Delay Expenses

Repairing damaged construction may not be the project’s only expense. A covered loss can delay completion and generate additional financial obligations.

Additional Interest Expense

Additional loan or financing costs resulting from a qualifying covered construction delay.

Permit and Inspection Fees

Additional permit, inspection, testing, engineering, or professional costs that must be incurred again.

Extended General Conditions

Certain additional project-management, temporary utility, security, rental, or supervisory expenses.

Architectural and Engineering Fees

Certain additional fees necessary to redesign, review, reconstruct, or restore damaged portions of the project.

Real-Estate Taxes

Certain additional taxes or carrying costs incurred because a covered loss delays project completion.

Lost Rental Income

For qualifying projects, delayed-opening or rental-income coverage may be available when specifically insured.

Soft-cost and delay-in-completion coverage is not automatically included in every policy. The anticipated expenses, rental income, financing obligations, and project timeline should be reviewed before coverage begins.

Know the Coverage Gaps

What Builder’s Risk Usually Does Not Replace

Builder’s Risk is project-property coverage. Contractors may need several other policies to protect the full operation.

General Liability

Third-party bodily injury, property damage, and completed-operations exposures generally require contractor general liability insurance.

Employee Injuries

Work-related employee injuries generally require workers’ compensation insurance.

Commercial Vehicles

Work trucks, vans, trailers, and registered vehicles generally require commercial auto coverage.

Contractor Tools

Portable tools and equipment may require a separate contractor’s equipment or inland marine policy.

Professional Errors

Design, engineering, consulting, and professional-service allegations may require professional liability coverage.

Faulty Workmanship

The cost of correcting defective design, materials, or workmanship may be excluded, although resulting damage may be treated differently.

Timing Is Critical

When Should Builder’s Risk Coverage Begin and End?

Coverage Should Usually Be Arranged Before:

Construction work begins

Materials arrive at the project

The lender releases construction funds

The owner or contractor assumes project responsibility

Coverage May End When:

The policy expires or is canceled

Construction is completed

The building is occupied or placed into use

Ownership or the insured’s interest changes

Do not assume coverage continues automatically after occupancy, substantial completion, or expiration. Report delays, occupancy changes, project-value increases, and construction-schedule changes before the policy ends.

Residential and Commercial Projects

Projects That May Qualify

Eligibility depends on project type, construction method, location, value, occupancy, completion percentage, loss history, and carrier guidelines.

Custom Homes

Spec Homes

Home Renovations

Room Additions

Apartment Buildings

Retail Buildings

Office Buildings

Tenant Improvements

Mixed-Use Projects

Industrial Buildings

Rehabilitation Projects

Commercial Remodeling

Project Insurance Review

Protect the Work Already Invested

Tell us about the property, project value, construction schedule, contractor, materials, and lender requirements.

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Construction Insurance Questions

Builder’s Risk Insurance FAQs

Review common questions about project eligibility, property coverage, construction timelines, contractors, owners, lenders, and policy requirements.

Who is responsible for purchasing Builder’s Risk insurance?

The property owner, developer, general contractor, or another party may be responsible. The construction contract and lender requirements should identify who must obtain coverage and which parties must be included as insureds.

Is Builder’s Risk required by law?

It may not be legally required in every situation, but construction contracts, lenders, property owners, developers, and project agreements frequently require it.

Does Builder’s Risk cover remodeling projects?

It may cover qualifying renovation, remodeling, addition, and rehabilitation projects. The value of the existing structure and the construction work must be accurately reported and properly insured.

Does Builder’s Risk cover theft?

Some policies cover theft of eligible construction materials and property, but limitations, security requirements, exclusions, sublimits, and deductibles may apply. Employee theft and unexplained disappearance are commonly treated differently.

Does Builder’s Risk cover flood or earthquake damage?

Do not assume these causes of loss are included. Flood, earthquake, and earth-movement coverage may be excluded, limited, or available separately or through an endorsement depending on the project and market.

Are contractor tools covered?

Portable tools and contractor equipment are not automatically covered simply because they are located at the project. They often require a separate tools-and-equipment or contractor’s equipment policy.

Does Builder’s Risk include liability insurance?

Builder’s Risk is primarily property coverage. Contractors and project owners should maintain appropriate general liability and other liability policies for bodily injury, third-party property damage, and related exposures.

What happens if construction takes longer than expected?

Contact the agency before the policy expires. An extension may require carrier approval, updated project information, additional premium, updated loss information, and confirmation of the revised completion date.

Can coverage begin after construction has already started?

Possibly, but eligibility may become more difficult after work begins. The carrier may require the current completion percentage, photographs, inspection information, loss history, and confirmation that no known damage exists.

How should the project limit be selected?

The limit is generally based on the project’s completed value, including eligible labor and materials. Land value should not normally be included, but existing structures, soft costs, debris removal, and other exposures may require separate consideration.

When does Builder’s Risk coverage end?

Coverage may end when the policy expires, the project is completed, the building is occupied or placed into use, ownership changes, or another policy-ending condition occurs. The exact termination provisions are stated in the policy.

Protect the Project from Start to Finish

Build With Greater Financial Protection

Best Formula Insurance can help property owners, developers, builders, investors, and contractors explore Builder’s Risk options based on the project value, location, construction type, timeline, and contractual requirements.