Builders Risk Insurance: Protecting Your Project While It Is Still Being Built
Building something new is exciting. Whether you are constructing a home, renovating a commercial property, or taking on a major remodeling project, there is something rewarding about watching an idea become a finished structure.
But construction also comes with uncertainty. Materials can be damaged before they are installed. A fire, theft, vandalism, severe weather event, or other unexpected incident can create a setback that affects your budget and your timeline. When thousands of dollars are invested in a project that is not yet finished, protecting that investment deserves serious consideration.
That is where Builders Risk Insurance can play an important role. Also known as course of construction insurance, builders risk coverage is designed to protect certain property and materials associated with a construction or renovation project during the building process.
Protect the Project
Coverage can help address certain covered losses involving a building while construction is underway.
Protect Materials
Construction materials and supplies can represent a significant investment before they ever become part of the finished structure.
Protect Your Timeline
Understanding your construction insurance options can help you prepare for unexpected events that could delay your project.
What Is Builders Risk Insurance?
Builders risk insurance is a specialized type of property insurance intended for buildings and structures while they are being constructed or renovated. Depending on the policy, it may cover certain physical property associated with the project against covered causes of loss.
A builders risk policy can be relevant to a variety of construction projects, including new residential construction, commercial buildings, renovations, additions, and major remodeling projects.
Unlike a standard homeowners or commercial property policy, course of construction insurance is designed around the unique circumstances of a property that is not yet complete. Construction projects change from week to week, which is one reason having coverage specifically designed for the building process can be so important.
What Can Builders Risk Insurance Cover?
Coverage varies by policy, project, insurer, and circumstances, but builders risk insurance may address certain covered losses involving items such as:
| Project Property | Potential Coverage Considerations |
|---|---|
| Building Under Construction | Certain physical damage to the structure while construction is underway. |
| Construction Materials | Certain materials intended to become part of the completed building. |
| Supplies and Equipment | Certain property used in connection with the construction project, depending on the policy. |
| Temporary Structures | Certain temporary structures or related property when specifically covered by the policy. |
| Debris Removal | Certain cleanup expenses following a covered loss, subject to policy terms and limits. |
It is important to remember that every builders risk policy is different. Coverage, exclusions, deductibles, limits, and conditions can vary significantly, so reviewing the actual policy is essential.
Who Needs Builders Risk Insurance?
A builders risk policy may be appropriate for several parties involved in a construction project. Depending on the project and contractual arrangements, the property owner, general contractor, developer, or another party may have an interest in arranging coverage.
If you are a homeowner building a new house, you may need to consider how the property is insured while construction is underway. A contractor managing a commercial project may also need specialized construction insurance. Developers and property investors may have their own requirements based on the scope and financing of the project.
Because responsibilities can differ from one project to another, it is important to discuss who is responsible for obtaining builders risk coverage before construction begins.
Why Standard Property Insurance May Not Be Enough
It is natural to assume that an existing property insurance policy will automatically protect a building during construction. Unfortunately, construction can change the risk substantially.
A building under construction may have exposed materials, temporary electrical systems, valuable equipment on-site, incomplete walls or roofs, and increased opportunities for theft or vandalism. The property may also be unoccupied for extended periods.
These circumstances are different from those of a completed home or commercial building. Builders risk insurance is designed specifically to address property risks during the construction phase.
Builders Risk Does Not Replace General Liability
One common misunderstanding is assuming that builders risk insurance covers every risk associated with construction. It generally does not.
Builders risk insurance primarily focuses on covered property risks associated with the construction project. General liability insurance, on the other hand, is designed to address certain third-party claims involving bodily injury, property damage, and other covered liability exposures.
For many construction projects, both property and liability considerations are important. Contractors may also need additional coverage such as workers' compensation, commercial auto, equipment coverage, or other specialized insurance depending on their operations.
Construction Delays Can Become Expensive
A construction delay is more than an inconvenience. When a project is interrupted, contractors may face scheduling challenges, owners may face additional financing or carrying costs, and everyone involved may be eager to get the project moving again.
Some builders risk policies may provide certain additional coverages or extensions related to a covered loss, while others may require separate coverage. This is why it is important to discuss the project's timeline, budget, materials, and potential exposures when selecting a policy.
When Should You Purchase Builders Risk Insurance?
Ideally, builders risk insurance should be arranged before construction begins or before your exposure to the construction project starts. Waiting until materials arrive or work is already underway can create unnecessary complications.
When discussing coverage, be prepared to provide information about the project, including the location, type of construction, estimated completed value, construction timeline, materials, contractors, and other relevant details.
It is also important to review your policy if the project changes. Significant cost increases, additions to the scope of work, changes in the completion date, or other developments may warrant a conversation with your insurance professional.
Protect the Vision Behind the Construction
Every construction project starts with a vision. Maybe you are building the home your family has dreamed about for years. Maybe you are expanding your business into a larger facility. Maybe you are renovating an older property to give it a completely new purpose.
Whatever you are building, you have invested time, money, and energy into getting it this far. Builders risk insurance can be an important part of protecting that investment while the project is still taking shape.
At Best Contractors Insurance & Bonds Washington, we can help you understand your options for builders risk coverage, course of construction insurance, and other commercial insurance needs associated with your project. We can help you identify the information needed to evaluate coverage and answer questions about protecting your investment during construction.
If you are planning a new construction project, major renovation, or commercial build, do not wait until something goes wrong to think about insurance. Contact Best Contractors Insurance & Bonds Washington at 425-828-6822 to discuss your Builders Risk Insurance needs and take an important step toward protecting what you are building.