Who needs builders risk insurance?

Anyone with a financial stake in a construction project — property owners, general contractors, developers, and lenders. Lenders almost universally require it before funding. GCs may be contractually required to carry it. The question of who buys it is usually answered in the construction contract.

How much does builders risk insurance cost?

Most builders risk policies are priced at 1–4% of total project value annually. A $500,000 project might cost $5,000–$20,000 for a 12-month policy. Factors include project type, location, construction method, insured value, and chosen deductible.

Is builders risk the same as general liability?

No. Builders risk covers property — the building under construction and its materials. General liability covers third-party bodily injury and property damage you cause. Both are needed on most construction projects. Many contractors mistakenly assume their GL covers the project itself — it does not.

Does builders risk cover theft of materials?

Yes, theft is a standard covered peril on most builders risk policies. This includes materials stored on-site and, depending on the policy, materials in transit or temporarily stored off-site. Sub-limits often apply to theft, so reviewing your policy carefully matters.

When does builders risk coverage end?

Coverage typically ends at the earliest of: project completion, when the building is occupied, when the policy expires, or when the property is accepted by the owner. Projects that run over schedule may need a policy extension — something we handle regularly for clients.

Can builders risk be extended?

Yes, most policies can be extended if the project runs over the original completion date. Extensions must be requested before the policy expires. Carriers may require an updated project status and revised completion date. We proactively monitor expiration dates for all our clients to prevent coverage gaps.

Do I need builders risk if my project is a renovation?

Yes, renovations and remodels carry real construction risk — fire from hot work, theft of stored materials, storm damage to an exposed structure. Many renovation projects also involve an existing structure that can be covered alongside new construction under a single builders risk policy.

Does builders risk cover the existing structure during renovation?

It can, but only if you specifically add existing structure coverage to the policy. The base builders risk policy covers new work only. If you're renovating a building you own or are responsible for, you need to confirm existing structure is endorsed onto the policy — or that a separate property policy is in place.

What is soft costs coverage on a builders risk policy?

Soft costs coverage pays for non-physical costs that increase after a covered loss — architect re-design fees, permit re-applications, legal fees, additional interest on construction loans, and real estate taxes during delay. It's often overlooked but can represent hundreds of thousands of dollars in exposure on larger projects.

Builders Risk & Construction Insurance

Builders Risk Insurance That Protects Your Project From Day One to Occupancy

We’ve helped contractors and developers secure builders risk coverage on everything from a $60,000 kitchen renovation to a $12 million commercial build. One call, dozens of carriers, same-day quotes — so your project never stalls waiting on insurance.

✓Coverage from ground-break through final inspection — no gaps
✓Materials on-site, in transit, and stored off-site covered
✓Lender-acceptable evidence of insurance issued same day
✓Hard-to-place projects, spec homes, and renovations welcome

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The Builders Risk Situations That Cost Contractors Real Money

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Project Delayed Because Coverage Lapsed

We’ve seen GCs scrambling at 4pm on a Friday because their builders risk expired and the lender won’t fund the next draw without a current binder. That’s a cash flow crisis — and completely avoidable.

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Lender Killed the Closing Without a Builders Risk Binder

We’ve seen lenders kill closings 48 hours before funding because the builder didn’t have a current builders risk binder in the loan file. Construction loans almost universally require it — and “I’ll get it tomorrow” isn’t an answer.

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$40,000 in Materials Stolen Mid-Build

Lumber, HVAC equipment, copper wiring — construction sites are targets. One weekend can erase weeks of margin. Without builders risk that specifically covers theft on-site, you’re writing that check yourself.

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Owner and Contractor Both Thought the Other One Bought It

In our experience, the owner-vs-contractor question is the single most common builders risk confusion we handle. The fire doesn’t care who assumed the other party had coverage. The contract needs to spell it out — and someone needs to verify a policy actually exists.

What Is Builders Risk Insurance?

Builders risk insurance — also called course of construction insurance — is a property policy that covers a structure while it’s being built or renovated. It fills the gap that standard commercial property insurance doesn’t cover: the period when a building exists but isn’t finished, occupied, or fully insurable under a permanent policy.

The policy attaches to a specific project, runs for the duration of construction (typically 6, 9, or 12 months), and terminates when the project is complete or the building is occupied. It’s not a general insurance policy — it lives and dies with that specific build.

What makes builders risk distinct from other construction-related policies is its focus on physical property during the construction process. Your general liability covers third-party injuries and property damage you cause to others. Workers compensation covers your employees. Builders risk covers the building itself — plus materials, equipment, and in many cases, soft costs and business income loss if a covered event delays your project.

Why Contractors and Developers Need Builders Risk

Construction sites are uniquely exposed. An open structure has no alarm system, no locks, no completed roof. Materials are staged in plain sight. Hot work creates fire risk. Storms find no resistance. The gap between groundbreaking and move-in is when your financial exposure is highest and your protection is thinnest — unless you have a builders risk policy specifically designed for that window.

We routinely talk to contractors and owners who believe their general contractor’s GL policy covers the project if something goes wrong. It doesn’t. GL covers liability to others — not damage to the building under construction. A fire that destroys three months of framing work is a property loss, not a liability loss. Without builders risk, that’s an uninsured loss.

Who Has an Insurable Interest?

Builders risk policies can name multiple parties with insurable interest in the project. Typically this includes:

Property owner or developer — who has the greatest financial stake in the completed project
General contractor — who may be contractually responsible for the work in place
Lender or bank — who has a security interest in the property as collateral
Subcontractors — in some cases where their materials are incorporated into the structure

The construction contract should specify who is responsible for purchasing the builders risk policy. In residential new construction, the owner typically buys it. In commercial construction, the GC often carries it — but this varies widely by contract type, lender requirements, and project structure. We help sort this out for every client before the policy is bound.

Types of Projects Covered by Builders Risk

Builders risk isn’t just for large commercial projects. We write policies across the full range of construction activity:

New Residential Construction

Single-family homes, spec builds, owner-builder projects, and custom homes from foundation through final inspection.

Commercial New Construction

Office buildings, retail, industrial, multifamily, and mixed-use developments — any project where a lender or investor has a stake.

Renovations & Remodels

Interior gut rehabs, additions, structural changes — projects that disturb an existing structure and create new material and fire risk.

Fix-and-Flip & Spec Homes

Investor rehabs and spec builds where the intent to sell creates a unique insurable interest structure that standard policies don’t handle well.

Tenant Improvements

Commercial build-outs where the tenant is improving leased space and needs to protect their investment in materials and fixtures.

Infrastructure & Civil Projects

Bridges, tunnels, utilities, and civil construction where course of construction coverage protects work in place before project handoff.

When Builders Risk Is Required

Construction Loan Requirements

Every construction lender we’ve ever worked with requires builders risk as a condition of funding. They need to know their collateral — the building they’re financing — is protected while it’s being built. Most lenders want to be named as a loss payee on the policy, and many have specific coverage requirements around deductibles and policy terms. We’ve facilitated this documentation hundreds of times.

Contract Requirements

AIA contract forms, standard GC agreements, and most owner-contractor agreements include a builders risk requirement. Section 11.3 of the AIA A201 General Conditions specifically addresses property insurance and typically requires the owner to purchase and maintain it. Ignoring this requirement creates both a contract breach exposure and an uninsured loss exposure.

Permit and Municipality Requirements

Some municipalities require proof of builders risk coverage as part of the permit application process. This is more common on larger commercial projects and in jurisdictions that have experienced significant construction losses. Check your local permit requirements before breaking ground.

What Builders Risk Covers — and What It Doesn’t

Understanding the coverage grid before you bind is the difference between a policy that pays and one that leaves you with a gap. Here’s how the standard builders risk policy breaks down.

Typically Covered

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Structure under construction — framing, walls, roof, foundation, and all work in place

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Materials on-site — lumber, fixtures, HVAC, flooring, and all stored materials

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Materials in transit — coverage while materials are being delivered to the job site

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Fire, lightning, explosion — the core property perils

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Wind and hail — standard on most inland builders risk policies

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Theft and vandalism — typically covered; sub-limits may apply

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Collapse — structural collapse during construction is a covered event

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Soft costs (endorsement) — architect fees, permit re-applications, loan interest after a covered loss

Common Exclusions

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Flood — requires separate flood endorsement or NFIP policy in most cases

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Earthquake — separate earthquake endorsement required; availability varies by state

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Faulty workmanship — the policy covers the result of faulty work (fire, collapse) not the defective work itself

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Employee theft — tools and materials stolen by workers typically excluded; crime policy required

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Contractor’s tools and equipment — these require a separate inland marine or tools floater policy

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Bodily injury / third-party liability — that’s general liability, not builders risk

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Existing structure (unless endorsed) — renovation projects need explicit existing structure coverage added

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Normal wear and settling — gradual damage is not a covered loss event

Why Trade Safe for Builders Risk?

We don’t just fill out an application — we shop your project to the right carriers, review the coverage form, and make sure the policy actually covers what you think it covers.

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Project-Specific Placement

We match your exact project type, location, and scope to the carriers who specialize in it. A spec home gets different carrier consideration than a commercial renovation. Getting this right affects both coverage quality and price.

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Same-Day Quotes and Binders

Construction doesn’t wait. We turn around builders risk quotes and binders the same day you call — often within hours. When a lender is waiting on evidence of insurance to fund a draw, we don’t make you wait overnight.

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Proactive Expiration Monitoring

We track your policy expiration dates and reach out before they lapse. You won’t discover your coverage expired when the lender calls — because we’ll have already contacted you to extend or replace it.

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Policy Review That Catches Gaps

We’ve found clients who thought they had soft costs coverage — didn’t. Thought flood was included — wasn’t. We go line by line through the coverage form so you know exactly what you have before a claim tests it.

Builders Risk FAQs

What does builders risk insurance cover?+

Builders risk covers the structure under construction, materials on-site and in transit, and losses from fire, wind, hail, theft, vandalism, and collapse. Optional endorsements add flood, earthquake, soft costs, delay in opening, and existing structure coverage. The standard policy is “open perils” — it covers all perils not specifically excluded.

Who should purchase builders risk — the owner or the GC?+

It depends on the contract. AIA A201 puts the obligation on the owner. Some GC contracts make the contractor responsible. Either can purchase the policy — what matters is that someone does, and that the policy reflects all parties with insurable interest. We sort through the contract language with every new client to make sure the right party is buying coverage and the right parties are named.

How much does builders risk cost?+

Most builders risk policies cost 1–4% of the completed project value annually. A $400,000 home would typically run $4,000–$16,000 for a 12-month policy. Commercial projects, coastal locations, projects with special construction types, and projects with prior losses may fall on the higher end. We shop to find the most competitive rate for your specific project profile.

Can I get builders risk without final construction plans?+

Sometimes. For smaller residential projects under $500,000, many carriers will bind with a detailed scope of work and a project budget in lieu of complete architectural plans. The carriers we work with require completed plans before binding on projects over $500K, but we can often secure preliminary coverage on larger projects while plans are being finalized. Call us early — waiting until plans are complete can delay your groundbreaking.

Does builders risk cover subcontractor property?+

Builders risk covers materials that become part of the permanent structure — which includes materials supplied by subcontractors once they’re incorporated into the work. It does not cover subcontractors’ tools, equipment, or portable property that doesn’t become part of the building. Each sub should carry their own inland marine coverage for their tools and equipment. Subcontractors can also be named as additional insureds on the builders risk policy by endorsement.

What happens if my project runs over the policy term?+

If your project isn’t complete when the policy expires, you have an uninsured gap — and lenders will call their loan if coverage lapses. Extensions must be requested before the expiration date. Carriers require a revised completion date and sometimes an updated project status. We monitor all expiration dates for our clients and proactively reach out 45–60 days before expiration so you never face this problem.

Is builders risk required by law?+

Not by state law in most cases, but it’s effectively required by contract. Construction lenders universally require it. AIA contracts require it. Most owner-contractor agreements require it. In practice, you can’t build with financing or under a standard construction contract without builders risk. Even for self-funded cash projects, it’s essential risk management — you’re exposed to fire, theft, and storm from day one.

Can builders risk cover an existing structure during renovation?+

Yes, but only if you specifically request and pay for existing structure coverage. The base builders risk policy covers new work only. If you’re renovating a building — especially one you own or are responsible for under the contract — you need existing structure coverage endorsed onto the builders risk policy, or you need a separate property policy that remains in force during construction. We check this on every renovation submission.

Explore More About Builders Risk & Construction Insurance

What Builders Risk Insurance Covers
Builders Risk Insurance Cost
Builders Risk vs General Liability
Who Buys Builders Risk — Owner or Contractor?
Builders Risk for New Construction
Builders Risk for Renovations & Remodels
Installation Floater Coverage
Course of Construction Insurance Explained
Soft Costs Coverage on Builders Risk
Delay in Opening / Business Income on Builders Risk
Builders Risk Policy Terms & Extensions
Common Builders Risk Exclusions
Working on a Job With Wrap-Up Insurance (OCIP/CCIP)

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