Builder’s Risk insurance, also known as Course of Construction insurance, covers property that’s under construction. As a contractor or construction professional, you must understand this important coverage.
What is Builder’s Risk Insurance?
A homeowner, general contractor or project manager can purchase a Builder’s Risk insurance policy during a home building project. The coverage protects the property from hazards and accidents that could occur.
Learn more at New Residential Construction Builders Risk Insurance.
What Does Builder's Risk Insurance Cover?
The accidents and hazards a Builder’s Risk insurance policy covers typically include:
- Burglary and theft
- Property loss during transport to the job site
- Scaffolding, temporary structures and construction forms on the job site
- Structure collapse
- Sewer or drain backup
- Site plans, blueprints and other valuable papers
- Fire
- Lightning
- Wind, hail or rain storms
- Explosion
- Impact by aircraft or vehicles
- Riot, vandalism and malicious acts
- Debris removal after a covered accident or hazard
What it may not cover
Most Builder’s Risk insurance policies include several exclusions, so read the policy carefully. Your policy probably does not cover:
- Property others own
- Accidents not related to covered perils
- Subcontractor actions or materials
- Professional liability
- Earthquakes
- Water damage
- Weather damage to property in the open
- Mechanical breakdown
- Employee theft
- Contract penalty
- Voluntary parting
- War
- Government action
What is the Policy Length?
The typical Builder’s Risk insurance policy covers a construction project that lasts from six to 12 months. Coverage ends when the project is finished or the property is occupied.
While the policy may be extended due to construction delays, the insurance company may want proof that you are making progress, and only one extension is often offered.
How Much Does Builder’s Risk Insurance Cost?
Expect to pay between one and four percent of the total construction budget for your Builder’s Risk insurance policy. The type of coverage and materials also factor into the cost.
Is Builder's Risk Insurance a Requirement?
As a contractor, project manager or homeowner, Builder’s Risk insurance gives you peace of mind. However, it’s not usually a requirement—check your project contract for details.
Purchase Adequate Insurance
As a construction professional, you should purchase the right insurance coverage for your business and projects. Insure the tools and equipment you own in case they’re stolen or vandalized, and purchase liability coverage that protects you if you damage the property or cause bodily injury.
Be sure the finished project is covered, too, in case something goes wrong with the home you build. For additional information see Builders Risk Insurance (Course of Construction).
Provide copies of your insurance policies to homeowners so they know you have the right coverage. Your insurance agent will work with you to purchase adequate coverage you can afford; ask your agent.
Builder’s Risk insurance protects a new home that’s under construction. Understand this coverage as you protect your assets and construction business.
Frequently Asked Questions
Who typically buys Builder’s Risk insurance?
Homeowners, general contractors, or project managers commonly purchase Builder’s Risk insurance for construction projects.
When does Builder’s Risk coverage begin and end?
Coverage generally begins when construction starts and ends when the project is complete or the property is occupied.
Does Builder’s Risk cover theft from the job site?
Yes, many Builder’s Risk policies include theft coverage for materials and equipment on the job site, subject to policy limits and exclusions.
Will Builder’s Risk cover materials damaged during transport to the site?
Some policies cover property loss during transport to the job site, but you should confirm limits and conditions with your insurer.