What Is Builders Risk Insurance?

Builders risk insurance is a vital form of protection for property owners and contractors undergoing construction projects, but it is complex and often misunderstood. There are no standardized policy forms for builders risk and coverage varies wildly among insurance carriers and between projects. If correctly designed however, a builders risk policy can help ensure your project is a success.

What does Builders Risk mean?

Builders risk is a special type of property insurance designed for buildings under construction. Also known as “course of construction" insurance, builders risk coverage begins on the policy effective date and ends when the work is completed and the property is ready for use, sale, or occupancy.

Since every construction project is different, no two builders risk policies are alike. Generally, most builders risk policies cover property losses due to fire, lightning, hail, explosions, hurricanes, theft, vandalism and many other risks. Standard exclusions may include ordinary wear and tear, acts of terrorism and war, employee theft, rust and corrosion, mechanical breakdowns, and damage resulting from faulty design, planning, workmanship and materials.

What does Builders Risk Insurance cover?

A basic builders risk policy covers buildings and structures while they are under construction as well as materials, supplies and equipment that are onsite, in transit and temporarily at other locations.

Coverage might also include the soft costs that arise when a covered loss causes a delay in a project's completion. Lost sales or rental income, additional interest on loans, real estate taxes, and other expenses can quickly add up when construction is delayed. Builders Risk Insurance can help minimize or eliminate the financial impact of these expenses.

It is important to note that a property owner’s builders risk coverage will not include coverage for workplace accidents or damage caused by construction workers. Therefore, it is important to ensure that anyone you hire to work on your project maintains adequate general liability and workers compensation insurance.

How do I buy Builders Risk Insurance?

Because every construction project is unique, it's important to work closely with a qualified broker and insurer to design coverage that provides the unique protection your project requires.

We would love to answer any questions that you might have. Contact Kovalev Insurance today and request a complimentary consultation to ensure your property is properly protected.