Builder’s Risk Insurance
Builder’s risk insurance, also known as course of construction insurance, is a specialized type of property insurance that helps protect buildings under construction from property damage. It covers materials, equipment, supplies and other property on site, in transit or at other locations ¹.
Who Needs Builder’s Risk Coverage?
Any person or company with a financial interest in the construction project needs builder’s risk insurance. Some common people you may want to include on your policy as insureds include the:
- Property owner
- General contractor
- Subcontractors
- Lender
- Architects
What Types of Property Does Builder’s Risk Insurance Cover?
A basic builder’s risk insurance policy helps cover buildings and structures under construction. It also helps protect:
- Materials
- Supplies
- Equipment on site, in transit or at other locations
What Does Builder’s Risk Insurance Cover?
A builder’s risk insurance policy helps protect your construction projects from certain kinds of property damage. It can also help cover additional soft costs, or expenses not directly related to construction, if property damage causes a delay. This can include:
- Lost sales
- Rental income
- Additional interest on loans
- Real estate taxes
Because every construction project is unique, each builder’s risk policy is different. You can customize your policy to fit your project’s needs by getting coverage extensions. Common extensions include protection for:
- Scaffolding
- Construction forms
- Temporary structures
- Debris removal and disposal in the event of a loss
- Pollutant cleanup
Builder’s Risk Insurance Exclusions
Be aware that builder’s risk insurance may have coverage exclusions. For example, earthquake, flood, wind or beach zones are usually excluded from coverage, but you may be able to get extensions to help protect projects vulnerable to these kinds of risks. Other builder’s risk insurance coverage exclusions include:
- Wear and tear
- Acts of terrorism and war
- Employee theft
- Rust and corrosion
- Mechanical breakdowns
- Damage due to faulty design
- Planning
- Workmanship and materials
- Engineers
How Much Does Builder’s Risk Insurance Cost?
Every builder’s risk insurance policy is different, so costs vary depending on what you need. Your policy may need more coverage or you may need to add extensions to help protect your construction project. Generally, your builder’s risk insurance cost depends on the:
- Construction materials
- Type of project
- Policy details, like coverage amounts and limits
A good rule of thumb is to choose coverage limits that are equal to the anticipated cost of construction ¹.
I hope this helps! Let me know if you have any other questions.
Source: Conversation with Bing, 1/15/2024
(1) What Is Builder's Risk Insurance? | The Hartford.
(2) Builder's risk insurance - Wikipedia.
(3) Builder’s Risk Insurance: What Is It? | Rocket Mortgage.
(4) Builder’s Risk Insurance: How It Works, Cost and Best Providers.
