Builder’s Risk for Contractors
COURSE-OF-CONSTRUCTION PROPERTY PROTECTION
What Does Builder’s Risk Insurance Protect?
Builder’s Risk, also called course-of-construction insurance, is specialized property insurance for eligible construction projects. It may protect the structure being built or renovated along with qualifying materials and property intended to become part of the finished project.
THE PROJECT
Structure Under Construction
May help protect the qualifying building or structure while it is being constructed, expanded, renovated, rehabilitated, or substantially remodeled.
MATERIALS
Construction Materials & Supplies
Eligible lumber, roofing, drywall, wiring, plumbing materials, flooring, cabinets, windows, fixtures, equipment, and other supplies may be covered depending on the policy.
THE INVESTMENT
Project Value Already Invested
As construction progresses, more labor and materials become part of the project. Builder’s Risk may help protect qualifying insured project value following a covered physical loss.
THE EXPOSURE GROWS AS THE BUILDING GROWS
A Construction Project Does Not Stay at the Same Value
A vacant lot may become a partially framed structure, then an enclosed building with roofing, electrical systems, plumbing, finishes, appliances, fixtures, and expensive installed equipment. Builder’s Risk is designed around this changing property exposure.
EARLY STAGE
Foundation & Framing
Concrete, framing, structural components, lumber, temporary materials, and early construction costs begin building project value.
MID-PROJECT
Roofing & Systems
Roofing, wiring, plumbing, HVAC systems, windows, doors, and mechanical systems add significant value.
FINISHING STAGE
Interior Finishes
Cabinetry, flooring, fixtures, appliances, lighting, finishes, and other installed property can materially increase the loss exposure.
NEAR COMPLETION
Almost Finished
A major loss shortly before completion can affect a substantial amount of accumulated labor, materials, and finished construction.
NEW CONSTRUCTION, REMODELING & REDEVELOPMENT
Builder’s Risk Is Not Only for Ground-Up Construction
Builder’s Risk may be available for many types of qualifying projects. Existing structures, renovation value, project scope, occupancy, construction type, and percentage completed can affect eligibility and how coverage should be structured.
Ground-Up Construction
New homes, commercial buildings, mixed-use properties, offices, retail buildings, industrial structures, and other qualifying new construction.
Major Renovations
Substantial interior renovations, structural work, rehabilitation projects, commercial remodeling, and significant property improvements.
Additions & Improvements
Room additions, expansions, tenant improvements, build-outs, and other qualifying projects that materially alter an existing structure.
MORE THAN ONE PARTY MAY HAVE MONEY AT RISK
Who May Have an Insurable Interest in the Project?
The construction contract, ownership structure, lender requirements, and project responsibilities can determine who purchases the Builder’s Risk policy and which parties should be appropriately included.
Property Owners
Owners building, expanding, rehabilitating, or substantially renovating residential or commercial property.
General Contractors
Contractors who have responsibility for the project, materials, construction schedule, or contractual insurance obligations.
Developers & Investors
Entities developing, rehabilitating, financing, or investing in property under construction.
Custom-Home Builders
Builders constructing homes under contract, on behalf of owners, or for eventual sale.
Construction Lenders
Banks and lenders may require Builder’s Risk coverage to protect their financial interest while construction funds are outstanding.
Multiple Interested Parties
A project can involve an owner, contractor, lender, developer, and other parties with financial interests that should be addressed appropriately.
CONSTRUCTION STARTING SOON?
Builder’s Risk Should Be Addressed Early in the Project
Coverage is generally easier to structure before significant construction begins, materials arrive, and the project accumulates substantial value.
FIRE, THEFT, WEATHER, DELAYS & CHANGING PROJECT CONDITIONS
Builder’s Risk Is About More Than the Building Limit
Construction projects change continuously. Materials arrive, work progresses, occupancy dates move, financing continues, and the building becomes increasingly valuable. Covered causes of loss, deductibles, project limits, storage, transit, soft costs, and policy termination provisions all deserve attention.
A CONSTRUCTION LOSS CAN HAPPEN AT ANY STAGE
Examples of Losses Builder’s Risk May Address
Fire
A qualifying fire damages framing, installed systems, building materials, fixtures, or other insured project property.
Theft
Copper, appliances, fixtures, equipment, materials, or other eligible covered property is stolen from the project.
Vandalism
The unfinished structure or qualifying project property is intentionally damaged by vandals.
Wind & Hail
Qualifying weather damages roofing, framing, windows, exterior materials, or other insured property.
Certain Water Damage
Certain accidental water-related losses may be covered depending on the source of the water and policy wording.
Collapse
Certain qualifying collapse losses may be covered depending on the cause and policy provisions.
Do not assume every catastrophe is included. Flood, earthquake, earth movement, named storm, theft, water intrusion, and other exposures may be excluded, limited, subject to special deductibles, or require separate coverage or endorsements.
REBUILDING IS NOT ALWAYS THE ONLY EXPENSE
A Covered Loss Can Create Additional Project Costs
A construction delay can create expenses that go beyond replacing damaged lumber, drywall, wiring, or fixtures. Soft-cost and delay-related coverage may be available for qualifying projects when specifically included.
Additional Interest
Certain additional financing costs resulting from a qualifying covered delay may be insurable.
Permit & Inspection Fees
Certain fees may have to be paid again after damaged work is removed and reconstructed.
Professional Fees
Architectural, engineering, consulting, testing, or other qualifying professional costs may increase after a covered loss.
Delayed Opening
Certain projects may qualify for specialized delayed-opening or rental-income protection when properly insured.
TIMING MATTERS
When Should Builder’s Risk Begin—and When Can It End?
Builder’s Risk is temporary project coverage. Occupancy, completion, expiration, ownership changes, and other conditions can affect when coverage ends.
START OF THE PROJECT
Coverage Should Generally Be Addressed Before
✓ Major construction begins
✓ Significant materials arrive
✓ Construction financing is released
✓ The insured assumes responsibility for project property
END OF THE PROJECT
Coverage May End When
• The policy expires or is canceled
• Construction reaches an applicable completion point
• The building becomes occupied or is placed into use
• Ownership or another policy-ending condition changes
Construction running behind schedule? Do not assume coverage automatically continues. Extensions may require insurance-company approval, additional premium, and updated project information before the existing policy expires.
RENOVATION PROJECTS NEED EXTRA ATTENTION
What About the Existing Building During a Remodel?
When work is being performed on an existing structure, there may be two major property values involved: the existing building and the value of the new construction or renovation work. Those values should not automatically be assumed to be insured in the same way.
Existing Structure
The value of the building that existed before construction began may need specific consideration and appropriate property coverage.
Renovation Value
New labor, materials, fixtures, systems, finishes, additions, and other project costs should be appropriately reflected in the insurance structure.
Occupied Renovations
Projects involving occupied buildings can create different underwriting considerations from completely vacant structures under construction.
BUILDER’S RISK LEARNING CENTER
Learn More About Protecting Construction Projects
Explore practical guides that explain common Builder’s Risk questions, construction timing, project values, and property exposures in everyday language.
PROJECT VALUE, COMPLETION DATE OR OCCUPANCY CHANGING?
Construction Changes Should Trigger an Insurance Review
Higher project costs, construction delays, revised completion dates, occupancy changes, additional phases, and major scope changes may affect the Builder’s Risk policy.
BUILDER’S RISK QUESTIONS
Builder’s Risk Insurance FAQs
Clear answers about new construction, renovations, project values, materials, theft, weather, lenders, contractors, occupancy, construction delays, and when Builder’s Risk coverage may end.
FROM FOUNDATION TO FINAL COMPLETION
Protect the Investment Being Built Into the Project
Best Formula Insurance can help contractors, property owners, builders, developers, and investors explore Builder’s Risk options for eligible new construction, renovation, rehabilitation, remodeling, additions, project materials, soft costs, transit, and temporary storage exposures.