What is Builders Risk Insurance?
Builders risk insurance, also known as course of construction (COC) insurance, is a specialized form of property insurance designed to protect buildings and structures during the construction process. It provides temporary coverage for damage or loss that may occur during new construction or remodeling projects.
Builders risk insurance typically covers the structure itself and can be extended to include building materials on-site or in transit. This type of insurance helps safeguard your investment from a range of risks before the construction is complete.
Who Needs Builders Risk Insurance?
Builders risk insurance is essential for contractors, property owners, developers, and even lenders involved in a construction project. In many cases, it is required by local, county, or state building codes before construction can begin. Whether you're building a new structure or renovating an existing one, this coverage provides critical protection.
What Does Builders Risk Insurance Cover?
Most builders risk policies cover damage caused by events such as:
- Fire
- Theft
- Vandalism
- Wind and hail
- Lightning
- Explosion
Coverage can also include temporary structures like scaffolding, construction signs, and fencing, depending on the policy.
Common Exclusions and Limitations
Like all insurance policies, builders risk insurance has exclusions. Common exclusions may include:
- Normal wear and tear
- Acts of war or terrorism
- Employee theft
- Faulty design, planning, or workmanship
It's important to thoroughly review the policy to understand what is and isn't covered.
Factors That Affect the Cost
Several factors influence the cost of a builders risk policy, including:
- Project size and type
- Construction materials used
- Location of the project
- Length of the construction period
- Coverage limits and deductible amounts
Builders risk policies are generally issued for terms of three, six, or twelve months. If your project isn’t completed on time, most insurers allow a one-time policy extension.
Proof of Insurance and Compliance
Many building authorities require proof of builders risk insurance before issuing permits or allowing construction to begin. A certificate of insurance serves as proof of coverage and demonstrates compliance with local regulations.
How to Get a Quote
Because builders risk insurance is considered a higher-risk policy, fewer carriers offer it—but there are still many reputable options. Working with an experienced construction insurance broker can help simplify the process of comparing policies and finding the right fit for your project.
An insurance agent can help you find the right carrier.
Frequently Asked Questions
Who typically buys builders risk insurance?Builders risk insurance is usually purchased by property owners, contractors, or developers overseeing new construction or major renovations. Is builders risk insurance required by law?While not always required by law, many local building departments require proof of insurance before issuing permits. Lenders may also require it to protect their investment. Can I extend my builders risk insurance if my project is delayed?Yes, most insurers allow a one-time extension if your project isn’t finished within the original policy term. It’s important to request the extension before the policy expires. Does builders risk insurance cover liability or injuries?No, builders risk insurance only covers property damage. You’ll need separate liability coverage to protect against injuries or third-party claims. What happens if I don’t have builders risk insurance?Without coverage, you risk paying out of pocket for damages caused during construction, which can significantly delay or increase the cost of your project.
Still have questions? Talk to a local insurance expert.
|
|