Whether you’re constructing a new home, renovating a commercial building, or working on a major infrastructure project, unexpected events can derail progress and add significant costs. That’s where Builder’s Risk Insurance comes in. This specialized type of property insurance is designed to protect construction projects from various risks and financial losses during the building process.
What Is Builder’s Risk Insurance?
Builder’s Risk Insurance—also known as Course of Construction Insurance—provides coverage for buildings and structures while they are under construction. It helps protect against damage caused by events such as fire, theft, vandalism, and certain weather-related incidents.
What Does Builder’s Risk Insurance Cover?
Policies can vary, but a standard Builder’s Risk Insurance policy typically covers:
- Physical Damage: Protection for the structure itself, including materials, fixtures, and equipment on-site.
- Fire and Explosions: Coverage for fires, lightning strikes, and accidental explosions.
- Theft and Vandalism: Protection against stolen or intentionally damaged materials and tools.
- Weather-Related Events: Windstorms, hail, and other natural disasters, though flood and earthquake coveragemay require additional policies.
- Equipment and Materials in Transit: Some policies include coverage for construction materials being transported to the site.
- Soft Costs: Additional expenses from delays, such as permit fees, architectural adjustments, and financing costs.
What Is Not Covered By Builder’s Risk Insurance?
While Builder’s Risk Insurance is comprehensive, there are exclusions, such as:
- Workmanship Errors: Faulty construction or design defects typically require separate coverage.
- Employee Injuries: Workers’ compensation is needed for on-site injuries.
- Contractor or Subcontractor Negligence: Issues related to professional liability are not covered under a standard policy.
Who Needs Builder’s Risk Insurance?
This coverage is essential for:
- Property Owners & Developers overseeing new builds or major renovations.
- General Contractors & Builders managing construction projects.
- Lenders & Financial Institutions requiring coverage as part of a loan agreement.
Why Is Builder’s Risk Insurance Important?
Without Builder’s Risk Insurance, damage or delays could result in significant out-of-pocket expenses. Since construction sites are particularly vulnerable to theft, fire, and weather damage, this policy provides financial protection and peace of mind throughout the project.
Comparing Coverage
| Coverage Type | Included in Standard Policy | Requires Additional Coverage |
|---|---|---|
| Physical Damage | ✅ | |
| Fire and Explosions | ✅ | |
| Theft and Vandalism | ✅ | |
| Weather-Related Events | ✅ Some | Tornado, Flood, Earthquake |
| Equipment & Materials in Transit | ✅ | |
| Soft Costs | ✅ | |
| Workmanship Errors | ❌ | ⚠️ Professional Liability |
| Employee Injuries | ❌ | 🏥 Workers’ Compensation |
| Contractor Negligence | ❌ | ⚠️ Professional Liability |
How to Choose the Right Policy
When selecting a policy, consider:
- Project Scope & Value: Ensure coverage matches the total estimated cost, including labor and materials.
- Coverage Extensions: Adding protection for floods, earthquakes, or other site-specific risks.
- Policy Duration: Coverage typically lasts for the construction period but can be extended if needed.
Finding the best price starts right here! Fill out our quick quote form and a Kind Insurance agent will be in touch with your available offers.
Business Insurance in Harrisburg, PA
There are many insurers who would love to tell you that you need far more policies than this. At The Kind Insurance, that’s not what we do. We are an independent insurance agency. That means we are not tied down to any specific selection of insurers. Our agents work with you to understand your needs and budget and then find a plan that suits you the best.
Get a quote today to explore your options.