Just because new construction homes aren’t occupied doesn’t mean they aren’t full of risk. From unexpected weather events to accidents on the job site, a lot can go wrong.
That’s where Builder’s Risk Insurance comes in.
This specialized type of insurance is designed to protect construction projects from unforeseen setbacks, offering peace of mind as you bring your vision to life. Whether you’re a contractor, property owner, or investor, understanding Builder’s Risk Insurance is crucial to safeguarding your investment.
Let’s dive into what it covers and why it’s a smart choice for your next project.
What Is Builder’s Risk Insurance?
Builder’s Risk Insurance, also known as Course of Construction Insurance, is a policy that protects your financial interest in a building or structure while it’s being built or renovated.
Construction projects come with a lot of risks—whether it’s damage from weather, fire, theft, or vandalism—and the financial impact of such incidents can be catastrophic. Builder’s Risk Insurance steps in to provide protection against these potential losses, ensuring that your project stays on track.
Anyone who has a financial stake in the construction project—meaning anyone who would suffer a financial loss if the property were damaged—can purchase a builder’s risk policy. This includes property owners, developers, contractors, subcontractors, and more. By securing this coverage, you’re safeguarding your investment and reducing the financial risk associated with unforeseen events during construction.
What Does Builder’s Risk Insurance Cover?
Broadly speaking, Builder’s Risk Insurance provides coverage for homes, commercial properties, and other construction sites while they are being built.
Although your exact Builder’s Risk coverage will depend on your policy, you can expect coverage for:
- Property damage
- Theft
- Vandalism
- Fire
- Lightning
- Windstorm
- Collapse
- Backup of sewers, drains, or pumps
You can also find supplemental coverage for off-site materials and equipment as well as soft costs.
As with most insurance policies, coverage limits will apply. Builder’s Risk Insurance does not generally provide any liability coverage; you would need a general liability policy for that. It also does not provide protection for the home’s contents, as most new construction homes should not contain any personal possessions.
As always, read your policy carefully so you understand what is covered or excluded.
Do I Need Builder’s Risk Insurance?
It’s safe to say that the property owner for every construction project needs to carry a Builder’s Risk Insurance policy. However, your circumstances will dictate who the “property owner” is.
If you bought your home from a major construction company like Meritage or Pulte, then the builder is usually the owner until the property changes hands. In these cases, the construction company will likely have adequate insurance, as any loss or damage related to the property would only be a liability for them.
However, if you are having a home custom-built on a plot of land you own, you would probably need a Builder’s Risk policy of your own in addition to property insurance.
In either case, it’s always a good idea to verify that your builder has the proper amount of coverage. Request a copy of their certificate of insurance to verify the types of risk insurance coverage they carry.
What Does Builder’s Risk Insurance Cost?
The cost of Builder’s Risk Insurance can vary depending on several factors (including your insurance company), and no two projects are exactly the same.
A few key factors influence the price of premiums:
- Project Type: Is it a residential home, a commercial building, or something more specialized? The type of project plays a big role in determining the cost.
- Location: Where your construction site is located matters. Areas prone to severe weather or higher crime rates may result in higher premiums.
- Construction Type: The materials used and the construction methods employed can impact the cost. Certain building materials may be seen as more durable (or more risky) than others.
- Timeline: The longer the project takes, the more it may cost to insure.
- Coverage: The level of coverage you choose—what’s included and what’s excluded—also affects the price. Adding extra protection can raise the premium.
- Additional Fees: Depending on your policy and provider, there may be additional administrative or inspection fees.
Each project is unique, so it’s best to get a personalized quote to understand what your builder’s risk insurance will cost.
Coverage When You Need It
Wherever you’re building, no construction project is complete without Builder’s Risk Insurance.
Construction companies and property owners alike have a lot riding on that new set of homes, office suites, and warehouses, and the construction industry is inherently risky. Protect your assets with the right amount of Builder’s Risk Insurance.
At Harry Levine Insurance, we’ve connected hundreds of clients with commercial bonds, Builder’s Risk, and other construction insurance policies. Our knowledge, experience, and customer service are second-to-none and we can’t wait to discuss your options so you can build an extensive network of coverage for your own home, car, or business.
Call today so that we can discuss your options and find the policy that is right for you.
