CoverageBuilder's risk
Builder's risk insurance
Builder's risk insurance covers a building or structure while it is under construction or renovation, including materials on site, in transit and in temporary storage. The construction contract usually says whether the owner or the contractor buys it.
What it coversCoverage
- The structure under construction. The building as it goes up, from foundation to completion.
- Materials on site. Lumber, stone and other materials waiting to be installed.
- Materials in transit and in storage. Materials on the way to the site or held temporarily elsewhere.
- Common causes of loss. Fire, wind, theft and vandalism, depending on the policy form.
- Soft costs (optional). Some policies can add costs such as delayed completion expenses.
What it usually does not coverExclusions
- Contractors' tools and equipment. Covered by a tools and equipment policy.
- Faulty workmanship. The cost of correcting defective work is generally excluded.
- Flood and earthquake. Often excluded unless added.
- Wear and tear. Gradual deterioration is not covered.
What contracts ask forRequirements
- Who buys it. The construction contract assigns builder's risk to the owner or the contractor.
- Named insureds. Owners, general contractors and subcontractors may all be named on the policy.
- Policy term. Coverage usually runs from the start of construction until completion or occupancy.
QuestionsFAQ
Who should buy builder's risk, the owner or the contractor?
Whoever the construction contract names. If the contract is silent, the owner and contractor should agree in writing before work starts.
Does builder's risk cover renovations?
Yes. Renovation and remodeling forms exist for work on existing buildings.
When does builder's risk end?
Usually when the project is complete, accepted or occupied, whichever comes first.
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