What is builders risk?

Builders risk is a special kind of coverage that protects buildings while they are under construction. It is considered property insurance, as elements of the build that are damaged by covered incidents are eligible for repair or replacement. Covered incidents include fire, theft, explosions, lighting, acts of God, or hail. Beyond the insured structure, coverage can also include supplies, materials, and equipment (whether it is in transit, on-site, or stored at another location). A property or project owner may require a builders risk policy, although architects, general contractors, lenders, subcontractors, and any individual or company that has a financial interest in the construction should be considered as insureds on the policy.

Builders risk coverage may be supplemented by Installation Floater Insurance. An installation floater protects against direct physical loss or damage to materials, as well as supplies and labor costs, for property being installed at job sites. Installation floaters may also cover materials while they are in transit or stored at temporary locations.

Synonyms for builders risk
There are additional terms that cover the risk faced by construction projects, though the coverage meaning remains the same. One synonym includes:

Course of construction insurance: This is insurance that protects insurable interests for a development or construction project, from fixtures, materials, equipment, or a partially completed structure itself.

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When do I need to be aware of builders risk?

Both residential and commercial new construction, installation, or renovation projects should be insured against the exposures of the construction process. Damages or losses to be covered are policy specific, though they do not have crossover coverage with general liabilities of accidents or operations. The policy targets property damage.

What is important to know about builders risk?

A builders risk policy can extend beyond the costs of repair or replacement, with some policies adding coverage for soft costs, business incomes, or additional expenses. Property to be covered could include fencing, temporary structures, scaffolding, landscaping, and signs. There are some other important items you should know about builders risk: Policies generally have a location-specific, single project application, but are underwritten to address the specific project exposures.
Blanket policies are multiple project coverage options good for developers or large contracting companies.

Builders risk exclusions typically include floods, earthquakes, employee theft, mechanical breakdowns, wear and tear, and wind damage.