Builders risk insurance
Coverwatch places builders risk for the owners, developers, and contractors putting up new construction or renovating existing buildings. We size the limit to the completed value and add the soft-cost and transit extensions a claim actually needs. A lender's checklist names fewer than that.
- Completed value the limit is set to
- Sublimits included for materials in transit and storage
- 60+ carriers shopped for your project
At a glance
- What it covers
- Physical damage to the building, materials, and fixtures while the project is being built.
- What it doesn't
- The finished, occupied building, and the cost to fix faulty workmanship or a design defect.
Trusted by 60+ carrier partners
What does builders risk insurance cover?
Builders risk insurance covers a structure under construction or renovation, plus the materials, fixtures, and equipment to be installed, against fire, wind, theft, vandalism, and other covered perils while the project is being built. It includes materials in transit and in temporary storage, and it ends when the project is completed or occupied.
How we get you covered
We take builders risk insurance to 60+ markets, build it to fit your business, and keep it compliant.
Read your risk
We map what could actually go wrong in your operation, where a claim would come from, and who would bring it.
Shop 60+ markets
We take your risk to the carriers that know your class and make them compete on price and terms.
Build the endorsements
We add the endorsement wording that decides whether the policy responds to a claim, beyond the base form.
Keep you compliant
We handle the COIs, additional-insured certs, and renewals, so you are never the one chasing paperwork.
Who needs builder’s risk
Anyone with a financial stake in a project under construction: the owner or developer who will own the finished building, and the contractors building it.
Contractors
General contractors and trade contractors who build or renovate structures often procure or are named on builders risk, especially on design-build and ground-up work.
General contractors
The GC frequently procures builders risk on the full project value and names the owner and lender as additional insureds.
Roofing contractors
An open roof is the build's biggest wind and water exposure, so the dried-in date drives the whole claim picture.
Plumbing contractors
Water damage from an open system is a frequent builders risk loss, and installed fixtures draw thieves.
Electrical contractors
Copper wiring staged or installed on an open site is the single most stolen material in construction.
HVAC contractors
Thieves cut rooftop and staged units out of finished work overnight, so HVAC sits high on the theft list.
Owners and managers undertaking ground-up development or major renovation of the buildings they hold carry builders risk for the duration of the work.
What's covered, and what isn't
In the policy
Fire damage to a structure under construction
A fire on a framed or partially built structure is the signature builders risk claim. The policy pays to clear the debris and rebuild the work in place, which a standard property or homeowners policy will not do for a building that is not yet finished.
Wind, hail, and other covered perils
Wind tears the roof off a partially built structure, hail damages installed materials, or a covered weather event collapses unfinished work. The policy responds to the named or all-risk perils on the form, repairing the physical damage to the project.
Theft of materials and installed fixtures
Copper wiring, HVAC units, lumber, and appliances staged or installed on an open jobsite are the most stolen items in construction. The policy pays to replace stolen materials and fixtures, a peril a finished-building property policy rarely contemplates.
Vandalism to the work in progress
Someone breaks in and damages the structure, smashes installed fixtures, or destroys materials staged for the next phase. Vandalism and malicious mischief are covered perils on most builders risk forms while the project is open.
Materials in transit and in temporary storage
Materials bought for the project but not yet on site, sitting at a supplier's yard, a temporary storage location, or in transit on a truck, are covered up to a sublimit. This closes the gap between the purchase order and the jobsite.
Not in the policy
The finished, occupied building
Once the project is complete or the owner takes occupancy, builders risk terminates and the exposure becomes a standard property risk. The finished building needs its own policy from day one of occupancy.
Covered by Commercial Property
The contractor's own tools and equipment
Hand tools, power tools, scaffolding, and the contractor's mobile equipment are not part of the structure being built, so builders risk does not cover them. They sit on a separate floater.
Covered by Inland Marine
Third-party injury or damage at the site
A visitor hurt on the jobsite, or damage your crew causes to a neighbor's property, is a liability claim, not damage to the project. Builders risk is first-party property coverage only.
Covered by General Liability
Faulty workmanship and design defects
The cost to redo defective work or correct a design error is excluded on most forms. An ensuing loss, like a fire that follows the defect, may be covered, and a LEG-3 endorsement broadens this. The defective work itself usually is not.
Covered by a LEG-3 endorsement, otherwise the contractor
Wear, tear, and rust
Gradual deterioration, corrosion, and mechanical breakdown of materials left exposed too long are maintenance issues, not sudden accidental losses. The policy responds to covered perils, not the slow decline of stored material.
Claims builder’s risk pays
Fire on a framed structure
A fire breaks out on a wood-framed building partway through construction and destroys the framing, sheathing, and installed systems. The builders risk policy pays to clear the site and rebuild the work to the point it had reached before the loss.
$250K–$5M+
Wind collapses a partially built roof
A storm tears through before the structure is dried in and the partially built roof collapses, damaging the walls and materials below. The policy responds to the wind peril and pays to repair the damaged work in place.
$100K–$2M
Theft of copper and HVAC from a jobsite
Thieves enter an open structure overnight and strip copper wiring, plumbing, and rooftop HVAC units, often cutting into finished work to reach them. The policy pays to replace the stolen materials and repair the damage caused getting to them.
$25K–$500K
Delay after a covered loss
A fire pushes the completion date back six months. With a soft-costs and delay-in-completion endorsement, the policy reimburses extended loan interest, re-permitting, and lost rental income for the delay caused by the covered damage.
$50K–$1M+
Ranges are typical repair, rebuild, and delay bands for these claim types, not a quote. Actual exposure depends on project size, construction type, and the limit and sublimits you carry.
How much coverage you need
There is no off-the-shelf limit. Two things set the number, and on builders risk you do not get to choose the lower one.
- The completed value of the project
- The limit must equal the full hard cost to finish the project: all materials, labor, and fees. This is a coinsurance form, so insuring to less than the completed value means a partial claim is paid at a penalty. Size it to the budget, then update it if costs escalate.
- What your lender and contract require
- The construction loan and the prime contract set floors of their own. Lenders require builders risk at the full loan or completed value with the bank named as loss payee, and a GC's subcontract often pushes the requirement down to the owner or developer before funding releases.
- The sublimits the loss will actually hit
- The headline limit is not the whole story. Materials in transit, off-site storage, theft, and soft costs each carry their own smaller sublimit. Size those to the real exposure, because a $1M project can lose more than the transit sublimit in a single stolen shipment.
- Construction lender
- Full completed value
- General contractor's subcontract
- Project completed value
- AIA A201 General Conditions
- Full insurable value
Most lenders will not fund a construction loan until a builders risk certificate insures the project to its completed value and names the bank as loss payee or mortgagee.
A prime construction contract typically requires the owner or GC to carry builders risk on the full insurable value of the work, often on an all-risk form, for the duration of construction.
The standard AIA A201 general conditions of the construction contract obligate the owner to maintain builders risk (property insurance) on the project at the full insurable value on a replacement-cost basis.
- Policy limit (completed value)
- Total project cost
- Materials in transit / off-site storage sublimit
- A fraction of the limit
- Soft-costs / delay-in-completion limit
- Endorsement, separate limit
- Deductible
- Per occurrence
The most the policy pays for a total loss. On builders risk this is set to the completed value of the project, the full hard cost of materials and labor to finish it. The value of work done so far does not set it. Under-report the completed value and a partial loss is paid at a fraction.
A separate, smaller ceiling that applies only to materials away from the jobsite, in transit or at a temporary storage location. It runs well below the main limit and varies by form, so a large shipment can exceed it if you do not raise the sublimit.
An optional extension with its own limit. It covers the financial fallout of a delay caused by a covered loss, such as extended loan interest, re-permitting, architect fees, and lost rent. It applies only after a covered physical loss, often past a waiting period.
What you absorb on each claim before the policy pays. Builders risk often carries separate, higher deductibles for wind, hail, and theft, and water damage, so the headline deductible is not the one that applies to the most likely loss.
Endorsements that close the gaps
The base form is the start. These add-ons are where the policy gets built to fit your business.
Soft costs and delay in completion
Adds coverage for the financial fallout of a covered loss that pushes back completion: extended loan interest, re-permitting, architect fees, and lost rental income. Carries its own limit and usually a waiting period.
LEG-3 defects extension
Broadens the faulty-workmanship exclusion so the policy covers ensuing loss and the cost to repair defective work, excluding only the cost to improve on the original specification. The most policyholder-friendly of the London Engineering Group clauses.
Lender's loss payable / mortgageholder
Names the construction lender on the property policy so it receives loss payment and accepts the certificate before releasing funding. Builders risk is first-party property coverage, so the bank is added as a loss payee or mortgageholder, not as an additional insured on a liability form.
Ordinance or law
Pays the extra cost to rebuild damaged work to current building codes after a covered loss, which a base form measures only against the original plans.
Questions buyers actually ask
Either can, and the construction contract decides. On many projects the property owner or developer buys the policy because they carry the financial interest in the finished building and the lender names them. On others the general contractor procures it and names the owner and lender on the policy. What matters is that every party with a stake is named: the owner, the GC, the lender, and key subcontractors. An unnamed party has no claim if the project burns. Coverwatch reads the prime contract and the loan agreement before placing the policy so the named parties match what the deal requires.
The limit is set to the completed value of the project, the full hard cost of materials and labor to finish it, not the value of the work done so far. Builders risk is a coinsurance form, so if you insure to less than the completed value, a partial loss is paid at a penalty proportional to the shortfall. On long or material-heavy projects where costs escalate mid-build, a reporting form lets you adjust the insured value as the project grows. Set the limit to the budget, then revisit it if material prices spike before the structure is dried in.
Usually not on the base form. The cost to redo defective work or correct a design error is excluded, because the policy insures against sudden covered perils, not the contractor's mistakes. There is an important exception: an ensuing loss, like a fire that results from the defect, is typically covered even when the underlying defect is not. A LEG-3 defects extension broadens this further, covering the ensuing loss and the cost to repair defective work while excluding only the cost to improve on the original specification. If defect exposure concerns you, ask for the LEG-3 wording rather than relying on the base exclusion.
Builders risk is a temporary policy tied to the construction timeline. Coverage generally begins at groundbreaking or when materials arrive and ends at the earliest of several triggers: the project is complete, the certificate of occupancy issues, the owner accepts and takes possession, or the building is occupied or put to its intended use. Some forms allow a grace period, often up to 60 days after occupancy, before coverage lapses. Once it ends, the finished building needs a standard commercial property policy from the first day of occupancy. The gap between builders risk ending and property coverage starting is a common and avoidable exposure.
Builders risk covers a building while it is being constructed or renovated, including the materials and fixtures going into it, and it is a temporary policy that ends when the project is finished. Commercial property covers a completed, occupied building and its contents on an ongoing annual basis. They are sequential, not interchangeable. A standard property policy will not pay for a fire on a half-built structure, and a builders risk policy will not respond once the owner moves in. The handoff between the two, when builders risk terminates and property coverage begins, has to be timed to the occupancy date so the building is never left uninsured.
Yes, but only up to a sublimit. Materials bought for the project but not yet installed, sitting at a supplier's yard, a temporary storage location, or in transit on a truck, are covered under most builders risk forms. The catch is that this coverage carries its own sublimit, a fraction of the policy limit that varies by carrier and form. A single large shipment of steel, lumber, or HVAC equipment can exceed it. If your project stages significant material off-site, ask to raise the transit and off-site storage sublimits to match the real value at risk away from the jobsite.
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