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Builders Risk Insurance

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Builders Risk Insurance

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Builder’s Risk Insurance, also called course of construction insurance, is temporary property coverage for a building, renovation, or repair project while work is still underway. It can help protect the project itself, including the structure, materials, and certain project-related costs, when covered damage happens before the job is complete.

Builder’s Risk Insurance Helps Protect the Project While Work Is Still Underway

A construction project can be exposed before it is ready for regular property insurance. Materials may be delivered before installation, the structure may be open to weather, and the contract or lender may require proof of project coverage before work begins. Builder’s risk insurance helps close that gap by focusing on covered damage to the building or renovation project during the construction period.

Who Needs Builder’s Risk Insurance?

Responsibility for buying builder’s risk insurance usually depends on the construction contract, loan requirements, and who has a financial interest in the project. The policy should be reviewed before coverage is put in place so the owner, contractor, lender, and project details are handled correctly. Select your role below to start a quote review for your project.

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Property Owners

You may have the largest financial stake in the project before the building is finished.

  • The Risk: Fire, wind, theft, or vandalism damages the project before permanent property coverage is ready.
  • The Fix: Owner-purchased builder's risk insurance reviewed around the full project value, materials, and timeline.
  • Best For: Custom homes, commercial builds, renovations, additions, and property development projects.
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General Contractors

Your contract may assign builder's risk responsibility before materials or crews arrive.

  • The Risk: The contract requires project coverage, but the policy does not match the job, owner, lender, or start date.
  • The Fix: Contractor-purchased builder's risk insurance with the project parties and contract requirements reviewed upfront.
  • Best For: Renovations, tenant improvements, spec homes, additions, and contractor-managed builds.
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Lenders & Developers

Loan documents often require builder's risk coverage to protect the project collateral.

  • The Risk: A covered loss delays the project, affects the collateral, or creates a dispute over who should be listed on the policy.
  • The Fix: Builder's risk coverage reviewed for lender interests, loss payable wording, project value, and term length.
  • Best For: Construction loans, multifamily developments, commercial projects, and real estate investors.

Builder's Risk Insurance Coverage

Builder's risk coverage should be built around the actual project. Dream Assurance can help review the project value, location, construction type, materials, soft costs, lender requirements, and timeline so the coverage is easier to compare.
What is Covered
Structure Under Construction: The building or structure being built, renovated, or repaired, including foundations, framing, and permanent fixtures when included by the policy.
Materials & Supplies: Building materials at the jobsite, and sometimes materials in transit or temporary storage when the policy includes those exposures.
Temporary Structures: Scaffolding, temporary fencing, construction trailers, and similar temporary structures may be included depending on the policy wording.
Soft Costs: Certain indirect costs tied to a covered delay, such as additional interest, taxes, architectural fees, or lost rental income, may be available when selected.
What is NOT Automatically Covered
Flood & Earthquake: These perils are often excluded or limited and may require separate coverage or endorsements based on the project location.
Faulty Workmanship: Builder's risk is designed for covered causes of loss, not the cost to correct defective work itself.
Contractor's Tools & Equipment: Tools, machinery, and mobile equipment usually need separate review through construction insurance or inland marine coverage.
Bodily Injury Liability: Builder's risk is property coverage for the project. Jobsite injury, property damage liability, and completed operations claims usually belong under general liability insurance.

Covered Perils vs. Common Exclusions

Understanding what may be covered and what needs separate review can help you avoid gaps before a loss happens.
✓ Typically Covered Perils ⚠ Common Exclusions or Limits
✓ Fire and smoke damage✗ Flood, unless separate coverage applies
✓ Wind and hail✗ Earthquake, unless endorsed
✓ Theft and vandalism✗ Faulty workmanship or design correction
✓ Lightning strikes✗ Mechanical breakdown
✓ Explosions✗ Employee theft
✓ Vehicle collision damage to covered project property✗ Normal wear, deterioration, or poor maintenance
   

Builder's Risk vs. Construction Insurance

Builder's risk insurance and construction insurance serve different roles. Many projects need both, but they should not be treated as the same policy.
Feature Builder's Risk Insurance Construction Insurance
Primary PurposeProtects covered project property during construction, renovation, or repairHelps protect the contractor's ongoing business operations
DurationUsually tied to the project termUsually annual and renewable
What It CoversBuilding structure, materials, temporary structures, and selected soft costsLiability, workers, vehicles, tools, equipment, and other business exposures
Who PurchasesProperty owner, developer, contractor, or another party named in the contractUsually the contractor or construction business
Covers Building During Construction✓ Yes, when the property and cause of loss fit the policy✗ Usually no
Covers Third-Party Injuries✗ No✓ Often reviewed under general liability or workers' compensation
Need ongoing business protection? Learn about Construction Insurance

Builder's Risk Insurance Cost

Builder's risk insurance cost depends on the project value, construction type, location, coverage limits, deductible, timeline, and selected endorsements.
  • Project Value: The completed value, materials, labor, and covered soft costs can all affect the policy limit and premium.
  • Construction Type: Frame, masonry, fire-resistive construction, renovation work, and tenant improvements may be priced differently.
  • Location and Perils: Wind, hail, wildfire, theft, flood, earthquake, and catastrophe exposure can change available options and endorsements.
  • Timeline: A project that runs longer than expected may need an extension or a policy term reviewed before expiration.

Why Compare Builder's Risk Insurance With Dream Assurance?

Dream Assurance is an independent insurance agency that helps project owners, contractors, and developers compare 30+ carrier rates for builder's risk insurance across 30+ licensed U.S. states. The goal is not only to quote the policy. It is to review the project details, identify possible gaps, and help you evaluate optimal coverage options for the work being performed.
  • Project-Specific Review: We can review the construction type, project value, location, materials, temporary storage, transit, soft costs, and expected completion date.
  • Contract and Lender Requirements: We can help compare the insurance language in your contract or loan documents before coverage is put in place.
  • Related Coverage Gaps: Builder's risk does not replace liability, workers' compensation, commercial auto, or tools and equipment coverage. We can help you review those needs alongside the project policy.
  • Agent Support: Our team can walk through the coverage questions and explain the next step clearly.

Coverage Guidance That Meets You Where You Are

Headquartered in Overland Park, KS and serving clients across multiple states, our team provides straightforward guidance to help you make informed insurance decisions.

If you're comparing insurance options or reassessing your current coverage, we'll help you evaluate what you have, identify potential gaps, and find a path forward that makes sense for your situation.

Licensed In 30+ States

Headquartered in Overland Park, KS, with licensed support across the Midwest, South, Northeast, and West.

  • AL, AZ, AR, CA, CO, DE, FL, GA, IL, IN, IA, KS, KY, MI, MN, MS, MO, MT, NE, NV
  • NJ, NM, NC, ND, OH, OK, OR, PA, SC, TN, TX, UT, VT, VA, WA, WI, MD, MA, & SD