What Is a Builder’s Risk Policy and Why Do You Need One?

If you’re planning a construction project, there’s one essential piece of protection you shouldn’t overlook: a builder’s risk insurance policy. This specialized type of property insurance is designed to cover buildings under construction and the materials, equipment and labor involved in the process.

What Does a Builder’s Risk Policy Cover?

A builder’s risk policy typically covers damage to the structure being built or renovated due to unexpected events such as:

• Fire
• Windstorms
• Theft or vandalism
• Lightning
• Explosion
• Vehicle or aircraft impact

Depending on the policy, coverage can also extend to building materials stored on-site or in transit, temporary structures like scaffolding, and even soft costs such as lost rental income or delayed opening expenses.

Builder’s risk Insurance does not cover liability for injuries on the job site, faulty workmanship or design errors. For those risks, separate liability or professional insurance policies are needed.

Who Needs Builder’s Risk Insurance?

This policy is essential for anyone with a financial interest in a construction project. That includes:

• Property owners
• Contractors
• Developers
• Lenders

The general contractor will often purchase the policy, but the property owner or developer may also be responsible. Clarifying who is buying the coverage and who is listed as an insured party is crucial to avoid gaps in protection.

How Long Does Coverage Last?

Builder’s risk Insurance is temporary. It usually begins when construction starts and ends when the project is completed or the property is occupied. Some policies may allow extensions if the project is delayed. Communicate with your insurer to ensure continuous coverage.

Learn More

Builder’s risk Insurance is a wise investment for anyone involved in construction. It protects your financial interests, helps manage risk, and ensures unexpected setbacks don’t derail your project. Before breaking ground, contact Gamecock Insurance Agency to ensure your coverage is tailored to your needs.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.