Builder’s risk insurance, also known as course of construction insurance, is a specialized type of property insurance that helps protect buildings under construction. Specifically, a builders risk policy covers materials, fixtures and equipment being used in the construction of a building or structure in the event they are damaged by a covered cause.
Builders risk is typically purchased by either the contractor performing the work or the owner of the property.
The Builders Risk policy provides coverage for damages done to the insured structure from a wide variety of events. Damage from the following events will be covered by most policies:
You should read your Builder’s Risk insurance policy to be familiar with its limitations and exclusions. Limited coverage is provided for collapse. Standard exclusions include:
Builders risk insurance typically covers the cost of property damage during construction due to accidents, fire, theft, natural disaster and vandalism. Without this insurance, any business is prone to setbacks even before they come to fruition.
Tip: Builder’s Risk Insurance policies can often be written in terms of three-months, six-months, or 12-months. Some are offered with a premium that can be refunded if the project is completed earlier and others provide no refund which is referred to as a 100% minimum earned premium. In addition, if the project is not completed by the end of the initial policy term, it can often be extended, but usually only one time.
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