- What is builder’s risk insurance?
- What does builder’s risk insurance cover?
- What doesn’t builder’s risk insurance cover?
- How much does builder’s risk insurance cost?
- How much builder’s risk insurance do I need?
- How do I get builder’s risk insurance?
What is builder’s risk insurance?
Builder’s risk insurance is a specific type of property insurance that protects a building while it is under construction or being renovated. Besides insuring the building itself, builder’s risk can also include protection for construction materials, labor costs, and temporary structures such as fencing and scaffolding. Builder’s risk insurance is especially important for general contractors who are doing new build construction or renovations. The coverage term begins when construction begins and typically terminates when the project is complete and turned over to the owner.
Example: Your general contracting business is building a single-family home. The foundation has been poured, and construction is 40% complete when a severe windstorm passes through the area and destroys the partially-built house. Your builder’s risk insurance would compensate you for the cost of the materials used so far, and the labor costs you’ve expended in completing 40% of the house.
What does builder’s risk insurance cover?
Builder’s risk insurance covers damage to buildings and materials while under construction. From damage caused by extreme weather or a break-in, builder’s risk protects against many common perils, including:
- Theft and vandalism
What doesn’t builder’s risk insurance cover?
Any damages that result from faulty design, work, or materials are excluded from builder’s risk coverage. For example, if you are constructing a new house, and it burns down from a wildfire, your business would be covered. On the other hand, if the building collapses due to a mistake in the structural building plan, builder’s risk would not offer any coverage.
Builder’s risk insurance also commonly excludes the following:
- Wear and tear
- Mechanical breakdown
- Employee dishonesty or theft
How much does builder’s risk insurance cost?
How much builder’s risk insurance do I need?
How do I get builder’s risk insurance?
There are many factors to consider when purchasing builder’s risk insurance—from the financial strength of an insurer to the pricing that you’re offered. AdvisorSmith has reviewed many of the insurance companies offering builder’s risk insurance, and below are some of the top companies.
» Learn more about how to get builder’s risk insurance