what does builders risk insurance cover

Builder’s risk insurance (also called “course of construction” insurance) typically covers damage to a building and related materials while a project is being built, remodeled, or renovated, but it does not cover every type of loss or liability.

What Builder’s Risk Insurance Usually Covers

Think of it as protection for the project itself rather than the people working on it.

• Damage to buildings and structures under construction (new builds, major remodels, additions).

• Foundations, fixtures, wiring, plumbing, HVAC, and other permanent installations in progress.

• Building materials and supplies on site, in storage, or sometimes in transit if included in the policy.

• Temporary structures such as scaffolding, construction trailers, fences, and signs when scheduled.

• Losses from common perils like fire, lightning, wind, hail, explosion, some types of water damage, theft, vandalism, and vehicle impact, when listed as covered causes of loss.

Some policies can be expanded to cover:

• Soft costs from project delays, such as additional interest on loans, extra design fees, or extended permits.

• Loss of expected rental income or business income if completion is delayed by a covered loss.

• Certain equipment or tools, where specifically added.

What It Does Not Normally Cover

A lot of surprises come from assuming this policy covers “everything on site,” which it does not.

• Injuries to workers (that’s workers’ compensation, not builder’s risk).

• General liability claims (for example, a visitor is hurt on site) unless liability is separately added; many builder’s risk forms are property-only.

• Normal wear and tear, rust, corrosion, or gradual deterioration.

• Damage caused by faulty design, poor workmanship, or defective materials themselves (though resulting damage from a covered cause may sometimes be treated differently depending on wording).

• Employee theft, war, terrorism, and often earthquake or flood, unless specifically endorsed.

Because this is a specialized policy, each insurer’s form can differ quite a bit, so exclusions need close reading.

Who Typically Needs It and When

The policy is meant to follow the life of a construction project from groundbreaking to completion.

• Owners, developers, or general contractors on new builds, major renovations, or large additions often carry the policy.

• Lenders and, increasingly, public or large private project owners frequently require builder’s risk as a condition of financing or contract award.

• Coverage usually starts when construction begins and ends at completion, occupancy, or a defined date such as 30–90 days after substantial completion, depending on the policy.

Key Takeaways for “What Does Builder’s Risk Insurance Cover”

• It is primarily property coverage for a project under construction, not a full replacement for liability or workers’ comp.

• It covers the value of the work in place and many materials, against specified hazards like fire, theft, wind, and vandalism, within clearly defined limits and exclusions.

• Critical details—like coverage for materials off-site, soft costs, and major exclusions (flood, earthquake, design defects)—are all negotiated and vary by insurer.

Information gathered from public forums or data available on the internet and portrayed here.