Builder's Risk Insurance: Do You Need It for Your Project?

When you break ground on a construction project—whether it’s a new build, renovation, or major remodel—there’s a lot at stake. Equipment, materials, timelines, and costs can all be impacted by things completely out of your control. That’s where Builder’s Risk Insurance comes in.

What Is Builder’s Risk Insurance?

Also known as Course of Construction Insurance, Builder’s Risk Insurance is a specialized type of property insurance designed to cover buildings and structures while they are under construction.

It helps protect against the unexpected—like fire, theft, vandalism, or severe weather—that could derail a project or cause major financial loss.

Why Is It Treated Like an “Add-On”?

Builder’s Risk isn’t automatically included in most general liability or property insurance policies. That’s because it’s temporary and very specific to a construction timeline. It’s usually considered an "add-on" because:

• It only applies during the construction period.
• It’s customized to the project (including coverage amounts, materials on-site, etc.).
• Once the build is complete, coverage typically ends and another type of insurance takes over.

Whether it’s required will often depend on your lender, local building codes, or the construction contract.

In fact, what the contract says about insurance responsibility is one of the most important things to review early. This determines not only who should hold the policy, but how risk is shared across parties.

What Does It Cover?

Builder’s Risk Insurance typically covers:

• Buildings under construction (new builds or major renovations)
• Materials and supplies, even in transit or off-site
• Equipment being installed (HVAC, electrical systems, etc.)
• Temporary structures, like scaffolding
• Soft costs from project delays (e.g., architectural, legal, or engineering fees)
• Weather-related events, such as wind, hail, or lightning
• Theft or vandalism

Some policies also allow for customization, including:

• Green building materials
• Sewer & drain backups
• Limited fungus/mold coverage
• Business income losses due to delay

Is Builder’s Risk Insurance Just for New Construction?

No. While it's commonly associated with ground-up construction, Builder’s Risk can also apply to significant renovations such as large kitchen remodels, additions, or structural changes. The key factor is whether there's a substantial financial risk tied to the construction activity.

Small cosmetic changes? Probably not necessary.
Knocking down walls or adding square footage? It’s worth a conversation.

Is There an Alternative to Builder’s Risk Insurance?

There are a few options, but none offer the same comprehensive project-specific protection:

• Homeowners Insurance or Commercial Property Insurance may offer limited construction coverage but often exclude theft of materials or damage to structures under renovation.
• Installation Floaters can protect specific materials or equipment but don’t cover the overall project.
• General Liability Insurance protects against injuries or accidents but not property damage during a build.

Bottom line: if you’re taking on a meaningful construction project, Builder’s Risk is the only way to truly protect the investment itself.

Who Typically Needs It?

Anyone with a financial stake in the project:

• Property owners
• General contractors
• Subcontractors
• Lenders
• Architects (in some cases)

Even if it's not required, having a Builder’s Risk policy in place is considered a best practice in construction risk management.

How Much Does It Cost?

Like most insurance, it depends. Common rating factors include:

• Project value
• Construction type (frame, masonry, etc.)
• Duration and square footage
• Location and flood/earthquake exposure
• Type of occupancy (residential, commercial, mixed-use)

Policies can be customized, and while the costs vary, the peace of mind often outweighs the premium.

Final Thoughts: Protect the Build Before It Begins

Construction always comes with unknowns. Whether you're starting from the ground up or renovating an existing space, Builder’s Risk Insurance isn’t just a nice-to-have—it’s a critical layer of protection during the most vulnerable phase of a project.

We work closely with our clients to evaluate real risk exposure, clarify responsibilities, and secure the coverage that’s right for the job, so you can build with confidence.