Builder's Risk Insurance

Builder's risk typically covers the structure under construction plus materials, fixtures, and equipment intended to become part of it, whether on site, in transit, or in temporary storage. Common covered perils include fire, wind, theft, and vandalism. Exact coverage varies by policy.

It depends on the contract. Sometimes the property owner purchases the policy, sometimes the general contractor does, and the contract usually spells out who is responsible. Whoever buys it, all parties with a financial interest in the project are typically named on the policy.

Policies are typically written for the expected length of the project, commonly in three, six, or twelve month terms, and may be extended if construction runs long. Coverage generally ends when the project is complete or occupied, so timing matters when you set up the policy.

Builder's risk generally does not cover tools and equipment that will not become part of the structure (that is inland marine territory), liability for injuries, or damage after the project is complete. Earthquake and flood often require additional coverage. Review exclusions carefully for each project.

It is often required in practice. Construction lenders typically require builder's risk before funding a project, and many construction contracts assign responsibility for the coverage to the owner or the general contractor. Check both your loan documents and your contract.

Generally, no. Builder's risk covers the structure and materials that become part of it, not tools and equipment used to do the work. Subcontractors typically cover their own tools through inland marine policies, and contracts often spell out who insures what.