Builders risk insurance is vital coverage for real estate development and construction projects. This specialized form of insurance helps provide financial protection for property owners, contractors and developers during the construction phase of a project. Understanding the nuances of builders’ risk insurance is crucial for anyone involved in the construction industry, as it can significantly impact a project’s success and financial security.
What Is Builders Risk Insurance?
Builders risk insurance is a type of property insurance that helps financially cover buildings under construction. This insurance can typically be tailored to your needs because each construction business and project has unique risks. Builders risk insurance can be essential for covering construction projects; without it, your organization may have to pay for costly incidents out of pocket, which could derail the project. An incident without insurance may also affect your company’s reputation and your ability to book future projects.
What Can Builders Risk Insurance Cover? 
Builders risk insurance can help financially protect construction projects from property damage at the site. Depending on the coverage, covered perils may include the following:
- Fire
- Lightning
- Hail
- Explosions
- Theft
- Vandalism
Some policies may also offer coverage for construction materials in storage off-site or in transit. Other available policy extensions may include protections for the following, depending on the insurer:
- Scaffolding
- Debris removal and disposal
- Construction documents
- Temporary structures
- Costs associated with construction delays
- Pollutant cleanup
What Is Excluded From Builders Risk Insurance?
It’s important to note that builders risk insurance typically does not cover certain items and risks, which may include:
- Earthquake and flood damage (unless specifically added to the policy)
- Normal wear and tear
- Intentional damage or negligence
- Damage resulting from faulty design, technique or materials
- Costs incurred due to construction delays that are not the result of a covered loss
Who Needs Builders Risk Insurance?
Builders risk insurance is crucial for various stakeholders involved in construction projects. Property owners, contractors, builders, lenders, architects, engineers, real estate developers and government entities may require this type of insurance to safeguard their interests during construction. This coverage protects against theft, vandalism, fire and other perils that could impact the construction site, materials and partially completed structures. Builders risk insurance is versatile, adapting to the specific needs of each construction project, making it an essential component in managing risks associated with the construction process. Contact Gray Insurance Group to discuss your insurance needs. We can help recommend coverage for your specific operations.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.