Protect Your New Home Construction Project with Builders Risk Insurance: What You Need to Know
Building something new is exciting—whether it’s a dream home, a commercial space, or a renovation project. But construction comes with risks.
From unexpected weather damage to theft of materials, a lot can go wrong on a job site. That’s where builders risk insurance steps in, offering peace of mind and financial protection while your project takes shape.
In this article, we’ll break down what builders risk insurance is, why it matters, and how it can safeguard your construction journey.
What Is Builders Risk Insurance?
Builders risk insurance, sometimes called course of construction insurance, is a specialized type of property insurance designed for buildings under construction, renovation, or installation.
It covers the structure itself, materials, and equipment on-site, helping you recover from losses caused by events like fire, vandalism, or storms.
Think of it as a safety net for your project.
Whether you’re a homeowner building a custom house or a contractor working on a commercial development, this policy ensures that unexpected setbacks don’t derail your plans or budget.
Why Do You Need Builders Risk Insurance?
Construction sites are full of potential hazards.
Here are a few reasons why builders risk insurance is a must-have:
Protection Against Property Damage
A sudden fire, hailstorm, or burst pipe can damage your partially built structure or materials. Builders risk insurance covers repair or replacement costs, so you’re not left footing the bill.
Coverage for Theft and Vandalism
Construction sites are prime targets for thieves looking to steal expensive tools, copper wiring, or lumber.
Vandalism, like graffiti or intentional damage, is also a risk.
This insurance helps cover losses from these incidents.
Financial Security for Delays
Some policies include coverage for delays caused by covered events, such as replacing damaged materials. This can help offset costs like extended labor or equipment rentals.
Peace of Mind for All Parties
Whether you’re the property owner, contractor, or developer, builders risk insurance reassures everyone involved that the project is protected.
It’s often required by lenders or project stakeholders before work begins.
What Does Builders Risk Insurance Cover?
Every policy is different, but most builders risk insurance plans cover:
The Structure: Damage to the building or renovation project itself, including walls, roofing, and foundations.
Materials and Equipment: Items like lumber, drywall, or tools stored on-site, in transit, or at a temporary storage location.
Natural Disasters: Damage from events like wind, lightning, or hail (though coverage for floods or earthquakes may require additional endorsements).
Fire and Explosions: Losses caused by accidental fires or gas leaks.
Vandalism and Theft: Damage or loss due to malicious acts or stolen materials.
However, there are exclusions to watch for.
Most policies don’t cover:
Damage due to poor workmanship or design flaws.
Wear and tear or normal deterioration.
Employee theft or fraud.
Certain natural disasters, like floods or earthquakes, unless you add specific coverage.
Always read the fine print and talk to your insurance provider to ensure your policy fits your project’s needs.
Who Should Get Builders Risk Insurance?
Builders risk insurance isn’t just for big commercial projects. It’s a smart choice for:
Homeowners Insurance: If you’re building a new home or doing major renovations, this policy protects your investment.
Contractors: General contractors often purchase builders risk insurance to cover their work and materials.
Developers: For large-scale projects like apartment complexes or office buildings, this insurance is critical.
Small Business Owners: If you’re renovating a storefront or office, builders risk insurance can cover the construction phase.
Pro tip: Check with your contractor or project manager. Sometimes, the contractor includes builders risk insurance in their contract, but if not, the property owner may need to secure it.
How to Choose the Right Builders Risk Policy
Not all builders risk policies are created equal.
Here’s how to pick one that works for you:
Assess Your Risks
Consider your project’s location, size, and timeline.
Are you in an area prone to hurricanes or wildfires?
Do you have high-value materials on-site?
These factors will shape the coverage you need.
Customize Your Policy
Work with your insurance provider to tailor the policy.
For example, add flood coverage if you’re in a flood-prone area or soft cost coverage for expenses like loan interest during delays.
Compare Quotes
Shop around to find competitive rates.
Look for insurers with experience in construction insurance—they’ll understand the unique risks of your project.
Check the Policy Duration
Builders risk insurance typically covers the construction period, from ground breaking to completion.
Make sure the policy aligns with your project timeline, with options to extend if delays occur.
Understand the Deductible
A higher deductible can lower your premium but means more out-of-pocket costs if you file a claim.
Balance affordability with coverage.
How Much Does Builders Risk Insurance Cost?
The cost of builders risk insurance varies based on factors like:
The value of the project (e.g., a $500,000 home vs. a $5 million commercial building).
The location and associated risks (e.g., urban vs. rural, flood zones).
The type of construction (wood-framed buildings may cost more to insure than steel).
The policy’s coverage limits and add-ons.
On average, expect to pay 1-4% of the total construction cost for a builders risk policy.
For example, a $400,000 new home construction project might have an insurance premium of $1,000 to $2,500 for the entire construction period.
Getting multiple quotes can help you find the best deal.
Real-Life Example:
Why Builders Risk Insurance Matters
Imagine you’re a homeowner building a new house.
Halfway through construction, a severe storm damages the partially built structure and destroys a shipment of custom windows.
Without builders risk insurance, you’d be stuck paying thousands out of pocket to repair the damage and replace the windows.
With a solid policy, the insurance covers the costs, and your project stays on track.
Or consider a contractor renovating a retail space.
If vandals break in and damage the drywall and wiring, builders risk insurance can cover the repairs, saving the contractor from eating the cost or delaying the project.
Final Thoughts: Build with Confidence
Construction is a big investment, and builders risk insurance ensures that your hard work and resources are protected.
By covering unexpected damages, theft, and more, this policy lets you focus on bringing your vision to life without worrying about what could go wrong.
Ready to get started?
Talk to our insurance agents who specializes in builders risk policies.
They’ll help you find coverage that matches your project’s needs and budget.
With the right protection in place, you can build with confidence, knowing you’re prepared for whatever comes your way.
Have questions about builders risk insurance or need help finding a policy?
