Builders risk insurance covers a building during construction, renovation, or major addition - protecting the structure, building materials, and equipment on site against fire, wind, theft, vandalism, and other covered perils. It's a temporary policy that lasts for the duration of the project. Without it, a fire or severe storm during construction could leave you with a destroyed project, outstanding loans, and no coverage to rebuild.
We're not just selling insurance. We're here to make sure you understand your options, feel confident in your coverage, and have someone in your corner when it matters most.
Who needs builders risk?
Builders risk coverage is essential for any significant construction project. General contractors building new homes or commercial buildings, property owners funding ground-up construction, and businesses undertaking major renovations all need this coverage. Most construction contracts specify which party - the owner or the contractor - is responsible for providing builders risk, and it's usually required before the first shovel hits the ground. Lenders financing new construction require it as a condition of the loan. Exposure to severe weather - straight-line winds, hail, and tornadoes - makes builders risk particularly important for projects with months of open framing. Theft of building materials from job sites is also a common claim. In our experience, the most common mistake is underestimating the project's total completed value, which can trigger coinsurance penalties at claim time. We shop top-rated commercial carriers for builders risk to get competitive rates on projects from $100,000 custom homes to multi-million-dollar commercial buildings.
What does builders risk cover?
- The building or structure under construction, including foundations and permanent fixtures
- Building materials and supplies on site or in transit to the site
- Temporary structures - scaffolding, fencing, construction trailers (varies by policy)
- Fire, lightning, windstorm, hail, explosion, and vandalism damage
- Theft of building materials and installed components
- Soft costs - architectural fees, permits, and loan interest for delays caused by a covered loss
- Debris removal after a covered loss
What builders risk does NOT cover
- Existing structures - those need a commercial property policy (or an endorsement for renovation projects)
- Employee injuries - covered by workers compensation
- Damage caused by faulty workmanship, design defects, or defective materials
- Earthquake and flood damage - require separate endorsements or policies
- Contractor's tools and equipment - require an inland marine floater
- Penalties and liquidated damages for project delays
- Liability for injuries to third parties - that's general liability
What does builders risk cost?
Builders risk premiums typically run 1% to 4% of the total completed project value, depending on construction type, project size, and duration. A $300,000 custom home might cost $3,000–$6,000 for a 12-month builders risk policy. A $2 million commercial building could run $15,000–$40,000. Frame construction costs more than masonry or steel. Longer project timelines increase cost. Higher deductibles - $5,000 to $10,000 - can bring premiums down significantly. We shop top-rated carriers for builders risk because rates and appetite vary widely, especially for larger or longer-duration projects.
Frequently asked questions
It depends on the construction contract. On many residential projects, the contractor purchases builders risk. On commercial projects, the owner often provides it. The contract should clearly state who is responsible. Either way, both parties should be named as insureds on the policy. We review the contract language with our clients to make sure the right party is carrying coverage and both are protected.
Yes, most builders risk policies cover theft of building materials and installed components from the job site. However, some carriers require reasonable security measures - perimeter fencing, locked storage, or security cameras - especially on high-value projects. Materials stored off-site or in transit may have sub-limits. We make sure the policy covers your actual site conditions.
Coverage typically starts on a specified effective date (usually when construction begins) and ends on the earliest of: project completion, the building being occupied, the policy expiration date, or the maximum policy term. Most policies are written for 3, 6, or 12 months with options to extend. If your project runs over schedule, you need to extend the policy before it expires or you'll have a coverage gap.
Your existing commercial property policy may cover minor renovations, but major additions, gut rehabs, or significant structural work typically need a separate builders risk policy. The risk profile during construction - open framing, power tools, hot work, unsecured openings - is fundamentally different from an occupied building. We review your existing property policy and recommend builders risk when the project warrants it.
Most states don't require it by law, but virtually every construction lender does as a condition of the loan. Even if you're paying cash, a single fire or windstorm during framing can destroy months of work and hundreds of thousands of dollars in materials and labor. For the 1–3% of project cost it typically runs, builders risk is one of the most cost-effective protections on any construction project.
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Related coverage to consider
- General Liability - Covers your business if a customer, vendor, or visitor is injured at your location, or if your work damages someone else's property.
- Commercial Property - Protects your business's physical assets: the building you own or lease, equipment, inventory, furniture, and business income lost during a covered event.
- Surety Bonds - A three-party guarantee: the bonding company guarantees to a project owner (obligee) that your business (principal) will fulfill contractual obligations.
- Workers Compensation - Covers medical expenses, rehabilitation, and lost wages for employees injured on the job.
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Reviewed by
Sheilia Royal, Agency Principal / Licensed Agent
Licensed in KY, IN & TN | 20 years experience | Last reviewed: March 2026