Builder’s Risk Insurance, also known as course of construction insurance, is a specialized policy designed to cover buildings and structures while they are being built, renovated, or remodeled. This policy typically covers materials, equipment, and labor costs associated with construction in case of unexpected damages.
What Does Builder’s Risk Insurance Cover?
This insurance policy generally provides coverage for:
Fire Damage – Protects against losses due to fires at the construction site.
Theft & Vandalism – Covers stolen or damaged materials and equipment.
Weather-Related Damages – Protects against losses from windstorms, hail, lightning, and more.
Explosion & Accidental Damage – Covers damages due to accidental explosions or unforeseen events.
Temporary Structures – Includes scaffolding, fencing, and other temporary installations used during construction.
What Is Not Covered?
While Builder’s Risk Insurance provides essential coverage, some exclusions include:
Worker Injuries – Separate workers’ compensation insurance is needed for employee injuries.
Liability Claims – General liability insurance is required for third-party injuries or property damage.
Intentional Acts or Negligence – Losses caused by intentional damage or poor workmanship.
Earthquakes and Floods – Usually, separate policies are needed for these disasters.
Who Needs Builder’s Risk Insurance?
This type of insurance is essential for various professionals and entities involved in construction projects, including:
Contractors and Builders – They are responsible for completing the project, and any damages could delay progress and increase costs.
Property Owners – If you’re constructing a new building or renovating an existing one, this policy protects your investment.
Developers – Large-scale construction projects need coverage for materials, equipment, and the structure itself.
Subcontractors – Trades like electricians, plumbers, and carpenters may also need protection for their work and materials.
Lenders and Banks – Financial institutions often require this insurance before approving loans for construction projects.
How Much Does Builder’s Risk Insurance Cost?
The cost of Builder’s Risk Insurance varies based on several factors, including:
Project Value – Higher construction costs mean higher premiums.
Location – Areas prone to natural disasters have higher insurance rates.
Coverage Limits – The more comprehensive the coverage, the higher the cost.
Project Duration – Longer projects may have increased premiums.
Why Is Builder’s Risk Insurance Important?
Without Builder’s Risk Insurance, any unexpected damage or loss during construction can lead to significant financial setbacks. Having the right coverage ensures that projects stay on track, reducing financial risks for builders, owners, and investors.
