Builder’s Risk Insurance: What It Covers and Who Pays for It

General liability protects you when your work harms someone else. But what protects the half-built structure itself – the framing, the materials, the installed fixtures – when a storm, fire, or thief shows up mid-project? That is the job of builders risk insurance, and on many projects it is the least understood policy on the certificate stack.

What Builder’s Risk Covers

Builder’s risk (also called course of construction coverage) is property insurance for a project under construction. A typical policy covers:

• The structure in progress – from foundation through final inspection.
• Materials on site – lumber, fixtures, and equipment awaiting installation.
• Materials in transit or in temporary storage – often included or available by endorsement.
• Named perils or all-risk events – fire, wind, hail, vandalism, and theft of building materials are the workhorses of builders risk claims.

What It Does Not Cover

Knowing the edges matters just as much:

• Faulty workmanship and design – the cost to fix defective work is excluded, though resulting damage may be covered depending on the form.
• Contractor tools and equipment – your own gear needs inland marine coverage.
• Injuries and liability – that is what general liability and workers comp are for.
• Earthquake and flood – often excluded by default and added back by endorsement where needed.

Who Buys It: Owner or Contractor?

Either can – the contract decides. On custom homes, the owner or their lender frequently purchases the policy. On commercial work, the GC often carries it and builds the cost into the bid. What matters is that exactly one party buys it, everyone else is properly named as an insured, and nobody assumes someone else handled it. Projects have burned – literally – in the gap created by “I thought you had it.”

How Builder’s Risk Is Priced

Premiums typically run a small percentage of the total completed value of the project – often somewhere between 1% and 4% of construction cost for the full project term, driven by construction type, protection class, project duration, and location. A $400,000 custom home might see builders risk in the low four figures for the build period.

Timing Tips Contractors Learn the Hard Way

1. Bind before materials arrive. The lumber package sitting on a bare lot is a theft magnet, and coverage cannot be backdated after the loss.
2. Match the policy term to the real schedule. Projects run long. Extensions are easy before expiration and painful after.
3. Watch the occupancy clause. Coverage often changes or ends when the building becomes occupied – relevant for phased move-ins and remodels.
4. Remodels need special attention. Renovation projects must coordinate builders risk with the owner’s existing property policy.

Get the Project Covered Before It Starts

Who Buys Builder’s Risk on a Remodel? The Trickiest Case

New construction is straightforward – somebody insures the whole project from dirt to done. Remodels are murkier: the homeowner’s existing policy covers the house, but insurers did not price that policy for an open roof, torch-down work, or a wall removed from the load path. Significant renovations can trigger policy conditions the owner never reads. The clean solution is a renovation builder’s risk policy coordinated with the homeowner’s carrier, plus clear contract language stating who insures what. Contractors who raise this question in the sales conversation look like professionals – and avoid becoming the deep pocket when the uninsured gap appears.

A final practical note: keep digital copies of your current documents where you can retrieve them from a job site, because requests rarely arrive while you are sitting at a desk. Being able to produce proof in minutes rather than days is a quiet competitive advantage that costs nothing.

Frequently Asked Questions About Builder’s Risk

Is builder’s risk required by law?

No statute requires it – lenders and contracts do. Construction loans almost universally mandate builder’s risk naming the lender, and sophisticated owners require it before breaking ground.

Does builder’s risk cover theft of installed materials?

Generally yes – theft of materials on site, installed or awaiting installation, is a core covered peril, subject to policy terms. Tools and equipment remain your inland marine’s job.

When does builder’s risk coverage end?

At the earliest of policy expiration, project completion or acceptance, or occupancy beyond permitted levels. That occupancy trigger deserves attention on phased projects – coverage can quietly end while punch-list work continues.

Who pays the deductible on a builder’s risk claim?

Whatever the contract says – which is why the contract should say. Well-drafted agreements assign deductible responsibility explicitly; silence breeds disputes at the worst possible moment.

Can subcontractors be covered under the project’s builder’s risk?

Often yes – policies can name GCs and subs as insureds for their interests in the work. Subs should request that status and confirm it, rather than assume; being an insured on the property policy pairs with waiver-of-subrogation protection when losses happen.

My Policy Plug places builders risk for Nevada projects from custom homes to commercial builds, coordinated with your liability program so nothing falls in the gaps. Call 702-444-2367 with your project details and get a quote before ground breaks.