Builders Risk Liability
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Builder’s Risk Insurance covers buildings and structures under construction, remodeling, or repair. It typically covers the same types of things as regular property insurance, such as damage from theft, fire, vandalism, wind, hail, and other accidental loss or damage to the property.
Coverage usually extends until the building or structure is completed and/or accepted by the owner.
Builders Risk Insurance is a form of property insurance, but only applies to a building or structure under construction. It doesn’t cover losses that occur before the project is started or after it is completed. In this sense, it is quite different from both Commercial Property Insurance and Homeowners’ Policies.
A Builder’s Risk policy is also different from a Surety Bond, which is used to protect the buyer from financial losses resulting from a contractor’s failure to complete a project.
Anyone with a financial interest in a major construction, remodeling, or repair project should consider Builder’s Risk Insurance coverage, including: general contractors, subcontractors, real estate developers, building owners, home builders, colleges and universities, and municipalities, among others.
Some trade associations and financial lending institutions may require Builder’s Risk Insurance, especially on projects worth a million dollars or more.
Quite often, Builder’s Risk Insurance policies don’t cover earthquakes and floods, but some companies may be able to provide this coverage at an additional cost.
Many policies will also cover loss or damage to construction materials in transit and in storage. Make sure this is covered if this is an important consideration to you.
Contactors’ equipment and tools typically aren’t covered by the building owner’s policy, and will most likely require separate coverage.
Some policies cover “soft costs” associated with other aspects of a construction project like financing, marketing, legal, accounting, additional property taxes, and loss of income resulting from property damage.
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