Builders risk insurance for new construction and remodeling

What builders risk covers

• The structure as it is built, at its value on completion
• Materials and supplies on site, waiting to be installed
• Materials in transit to the site and stored at another location
• Temporary structures such as scaffolding, forms and construction fencing, when included
• Debris removal after a covered loss
• Soft costs, such as extra interest and permit fees caused by a covered delay, when added

New construction or renovation

Ground-up construction and renovation are written on different applications because the risk is different. A new build starts at zero value and grows. A renovation puts new work into a building that already exists, and the policy has to address whether the existing structure is covered at all.

Use the new construction application for ground-up projects and the renovation application for remodels, additions and gut rehabs.

Who buys it

Either the owner or the general contractor can buy builders risk. The construction contract usually says who. Whoever buys it should name the other parties, usually the owner, the general contractor and the lender, so every interest is protected.

Common exclusions

• Faulty workmanship and design defects (resulting damage is sometimes covered)
• Contractors tools and equipment, which belong on an equipment floater
• Theft of materials not yet delivered or installed, unless the site is secured as required
• Earthquake and flood, unless added
• Coverage after the building is occupied or put to its intended use

How to get a builders risk quote

1. Pull the construction contract and check who is required to buy builders risk and which parties must be named.
2. Gather the project address, building type, number of stories, square footage and construction type.
3. Work out the completed value, split into hard costs (labor and materials) and soft costs (interest, permits, fees).
4. Note the start date and the expected completion date, and whether any part of the building will be occupied early.
5. List site security: fencing, lighting, cameras and any watch service, plus the distance to the nearest hydrant.
6. Get the lender's exact name and loss payee wording so it can be shown correctly on the policy.
7. Choose the right application: new construction for ground-up work, renovation for remodels and additions.

Course of construction insurance

Course of construction insurance is another name for builders risk. The term is common on the West Coast and in some contracts, and both names describe the same coverage: the building and materials while the project is being built.

If a contract, lender or permit asks for course of construction coverage, the builders risk applications on this site are the right place to start.

Builders risk insurance for homeowners

Homeowners building a new house, an addition or an accessory dwelling unit often need builders risk, because a standard homeowners policy may not cover a structure while it is under construction. Lenders on construction loans usually require it.

Either the homeowner or the general contractor can buy the policy. The construction contract should say who is responsible, and the policy should name the other party and the lender where required.