Construction projects involve significant investment and significant risk. Builder’s risk insurance protects a building or structure under construction from damage — ensuring that a fire, storm, theft, or accident doesn’t derail the project before it’s complete.
What Builder’s Risk Insurance Covers
Builder’s risk insurance covers the structure under construction, as well as materials, equipment, and supplies on-site and in transit to the site. Covered causes of loss typically include fire, lightning, wind, hail, explosion, theft, and vandalism. Some policies can be extended to cover soft costs — architectural fees, legal fees, permit costs, and additional interest expenses incurred because a loss delayed project completion.
Who Needs Builder’s Risk Insurance
Builder’s risk insurance can be purchased by the project owner, general contractor, or developer — whoever has an insurable interest in the project. On larger commercial projects, multiple parties may have insurable interests, and the policy structure should reflect that. Residential projects, commercial construction, renovation projects, and infrastructure development can all be covered under appropriately structured builder’s risk policies.
Duration and Coverage Period
Builder’s risk policies are typically written for the duration of the construction project, with coverage ending when the project is substantially complete, the structure is occupied, or the policy expires — whichever comes first. It’s critical to notify your insurer when a project is completed so you can transition to a standard commercial property policy. Gaps in coverage during this transition period can be costly.
What Builder’s Risk Does Not Cover
Standard builder’s risk policies do not cover employee theft, mechanical breakdown of equipment, flooding (a separate flood policy is required in most cases), or earthquake damage. Contractor’s equipment — such as cranes, lifts, and excavators — typically requires a separate inland marine or contractor’s equipment policy.
Construction Insurance from Bozzuto Group
Bozzuto Group works with contractors, developers, and project owners to structure builder’s risk and broader construction insurance programs that protect projects of all sizes. Contact us today to discuss your next project.