How Builders Risk Insurance Can Save You Headache

How Builder’s Risk Insurance Can Save You a Massive Headache

Construction projects are full of moving parts — deliveries arriving, subcontractors juggling schedules, weather throwing off timelines. In the middle of it all, a single mishap can derail everything.

Maybe it’s vandalism. Maybe it’s theft. Maybe it’s a fire sparked by faulty wiring.

Whatever the case, the financial and emotional toll can be huge — especially if you’re not covered. That’s where Builder’s Risk Insurance comes in.

If you’ve never used it before, you’re not alone. Many small contractors and developers skip it, especially on residential jobs. But skipping this policy can leave you exposed to tens of thousands in losses. In this post, we’ll break down what it covers, who needs it, and how it can save you time, money, and stress.

What is Builder’s Risk Insurance?

Builder’s Risk Insurance (also known as Course of Construction Insurance) is a specialized policy that protects buildings during construction. It typically covers damage from:

• Fire
• Theft
• Vandalism
• Certain weather events

Coverage often extends beyond just the building itself. Depending on the policy, it can also include:

• Materials stored off-site
• Temporary structures like scaffolding or fencing
• Construction equipment on-site
• Debris removal and soft costs (if added)

The coverage period usually starts before construction begins and ends when the project is completed or occupied.

Who Should Carry the Policy?

The policy can be taken out by the general contractor, property owner, developer, or builder — and sometimes it’s required by the lender.

General rule: whoever has the most financial stake in the project should carry the policy.

If you’re overseeing the whole job, it gives you more control and peace of mind. If you’re a subcontractor, it’s worth confirming that the GC or client has it — because if something happens to your materials, you’ll want to be covered.

Why It Matters

Let’s say you’re halfway through framing a custom home and a storm knocks down half the structure overnight.

Or someone breaks in and steals $25,000 worth of copper piping.

Without builder’s risk coverage, you could be on the hook for the loss — or caught in a frustrating back-and-forth between clients, suppliers, and insurers.

With the right policy? You file a claim. You get reimbursed. And you keep the project moving forward.

That’s not just protection — that’s business continuity.

What It Doesn’t Cover

Like any insurance policy, builder’s risk has limits. Common exclusions include:

• Employee theft
• Labor disputes
• Normal wear and tear
• Poor workmanship or design flaws
• War and terrorism
• Damage after the project is complete

That’s why builder’s risk is just one piece of the puzzle. You’ll still want general liability, workers comp, and equipment coverage in place.

Customizing Your Policy

Builder’s risk policies are flexible. You can tailor them to your timeline, project type, and risk level. Some popular add-ons include:

• Business interruption coverage – Protects against lost revenue from delays
• Expediting expenses – Covers rush shipping or quick repairs
• Ordinance or law coverage – Helps cover upgrades to meet new codes
• Pollution clean-up – Essential for demolition jobs or older properties

Working with an insurance advisor who knows the construction industry can help you customize a smart, cost-effective plan.

Best Practices for Contractors

• Don’t wait – Get coverage before the first shovel hits the ground. Insurance won’t backdate.
• Clarify responsibility – Confirm if you or the owner will carry the policy. Get it in writing.
• Keep documentation organized – Invoices, receipts, site photos, and inventory lists make claims smoother.
• Bundle your policies – Many insurers offer better rates if you package builder’s risk with other contractor coverage.

Real-World Example

A home remodeler in Texas started a five-month kitchen and bath renovation. Midway through the job, a lightning strike caused an electrical fire that damaged the unfinished space and several appliances.

Luckily, the contractor had a builder’s risk policy in place. It covered temporary wiring and appliances stored on-site. The claim payout helped replace materials and kept the project on track — with no surprise costs for the contractor or the client.

Final Thoughts

Builder’s Risk Insurance might feel like an extra line item — until something goes wrong. Then it becomes your lifeline.

It protects more than just materials. It protects your time, your profit margin, and your client relationships.

Whether you’re building from the ground up or taking on a major renovation, make builder’s risk part of your project planning. Because in construction, it’s not about if something unexpected happens — it’s when.

And when it does, you’ll be glad you were ready.