What Is Builder’s Risk Insurance?

Builder’s Risk insurance can seem similar to other types of policies. Find out how this coverage is different and why it’s just as important.

As someone taking on a new construction or undergoing a major renovation, you likely know about Builder’s Risk insurance. But how exactly does it differ from a Trades and Contractors policy?

Below, we'll explain:

• What Builder’s Risk covers and who it’s for

• What this type of insurance doesn’t cover

• How it’s different from other risk coverage

• Why it’s important for any construction project

• How you can get covered today

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What Does Builder’s Risk Insurance Cover?

This type of insurance, which is also known as Course of Construction, covers any structure while it’s being built. This can include both new projects and pre-existing buildings that are undergoing renovations.

A policy like this typically offers project-specific Property Coverage and Premises Liability. For example, our Builder’s Risk insurance includes both of these coverages with limits up to $2M for new constructions and renovations.

Course of Construction insurance usually also includes the following coverage types:

• Rental Value

• Additional Living Expenses

• Change Order Coverage

• Equipment Breakdown

• Sewer Backup, Flood, and Earthquake

With Builder’s Risk insurance, your project materials, supplies, and equipment (both onsite and in transit) will often be covered if damaged by:

• Fire

• Explosion

• Vandalism

• Theft

• Weather

• Vehicles or aircrafts

When property damages cause delays, insurance can also help cover the loss of any sales, rental income, real estate taxes, or interest on loans.

All construction jobs are unique, which is why each policy will look different. If your site requires additional coverage, you can often extend your policy to include items like scaffolding, debris removal, and temporary structures.

What Doesn’t Builder’s Risk Insurance Cover?

Although this type of policy is important to have in place for your protection, you’ll also want to check with your insurance company to understand what’s not included.

Typically, the below would be excluded from your coverage:

• Acts of war

• Contract penalty

• Employee theft

• Engineers

• Government action

• Poor design, materials, or craftsmanship

• Voluntary partings

Who Is Builder’s Risk Insurance For?

This policy can be bought by the building owner, a general contractor, or a construction manager. Regardless of who purchases the policy, however, you may want to consider including the following individuals in the coverage:

• Property owner

• General contractor

• Construction manager

• Subcontractors

• Lenders

Related: Builder risk insurance cost

How Is It Different from Trades and Contractors Insurance?

While both Builder’s Risk and Trades and Contractors Insurance provide coverage for job sites, they operate in very different ways.

The coverage from a Builder’s Risk policy typically protects the property under construction and the materials and equipment used for that project. Without it, there may be a gap in coverage for the structure. Coverage is usually in place from the beginning of a project until it has been completed.

Trades and Contractors, on the other hand, is a package policy that allows a service provider to build custom coverage for their unique business needs. The commercial general liability coverage included in a policy like this can help protect trades professionals in the event of an accident that causes injury to a client or damage to the property.

Looking for Builder’s Risk Insurance for Your Project?

Finding the right insurance policy for your project can feel overwhelming and, at times, confusing.

Designed for residential and light commercial buildings with wood frame constructions, our Builder’s Risk insurance offers a policy period up to 18 months and allows backdating up to 14 days.

Find out how you can get covered in minutes with our quick, easy, and entirely online application process.

Related: When should builder’s risk insurance start

Need Insurance for Your Small Business?

APOLLO and Gallagher have partnered to provide insurance designed for businesses and business professionals. Get a free quote online in under five minutes and receive your policy instantly.

Get a Free Online Quote

4.7 rating