Builder’s Risk Insurance

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Builder’s Risk Insurance, also known in some areas as Course of Construction, is a unique kind of property insurance. It covers a building where the building or insured area is presently being constructed. It can cover just the structure, or also the materials on site waiting to be installed or transported to the job site and is a type of insurance that most owners will ask every contractor to carry.

The builder’s risk insurance policy will pay for damages up to the coverage limit. The limit must accurately reflect the total completed value of the structure (all materials and labor costs, excluding land value). The construction budget is the best source for determining the appropriate limit of insurance. Builder’s Risk insurance policies can often be written in terms of three months, six months, or 12 months. If the project is not completed by the end of the initial policy term, it can often be extended, but usually only one time.

Understanding Builder’s Risk Coverage

The builder’s risk policy will provide coverage for damage done to the insured structure from a wide variety of events. Damage from the following events will be covered by most policies:

  • Fire
  • Wind (may be limited in coastal areas)
  • Theft
  • Lightning
  • Hail
  • Explosion
  • Vandalism
  • Vehicles/Aircraft