Builders Risk Answer

Who Pays for Builders Risk Insurance?

The answer is in your contract — but the consequences of nobody paying for it fall on everyone. Here’s how the obligation is typically assigned and what to verify before breaking ground.

• ✓Contract language determines who buys and who pays
• ✓AIA contracts default to the owner — GC contracts often flip it
• ✓Lender requirements layer on top of contract obligations
• ✓We verify the obligation is met before your project starts

The Direct Answer

Who pays for builders risk insurance is a contract question, not a law question. Either the property owner or the general contractor can be assigned the obligation — and either can pay for it. The AIA A201 General Conditions (Section 11.3) defaults to the owner. Many GC-drafted contracts shift the obligation to the contractor.

What matters most: someone actually buys the policy, all parties with insurable interest are named on it, and the lender (if any) is listed as a loss payee. We verify these three things for every client before binding.

When the GC pays for builders risk, the premium is typically priced into the bid as a project cost. When the owner pays, it’s a direct project expense. Either way, the cost ultimately comes from the project budget — the question is who holds the policy and manages it.

What Happens When Nobody Pays for It

The owner assumed the GC had it. The GC assumed the owner bought it. Nobody checked. Then there’s a fire. We’ve handled more post-loss calls than we can count where this exact scenario played out. The loss happens, both parties look for the builders risk policy, and there isn’t one.

At that point, both parties have a problem. The owner has an uninsured physical loss. The GC may have contract liability for failing to maintain required coverage. The lender calls the loan. The project stalls. A conversation that should have happened in week one of the project becomes a legal dispute.

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