What Is Builder’s Risk Insurance?
Builder’s Risk Insurance is a temporary property insurance policy designed to protect buildings that are under construction, renovation, or major remodeling.
Unlike a standard Homeowners or Commercial Property policy, Builder’s Risk Insurance is specifically designed for projects where a structure is being built, repaired, or substantially improved.
Coverage typically remains in effect during construction and ends once the project is completed or occupied, depending on the policy.
Builder’s Risk Insurance can help protect everyone with a financial interest in the project, including property owners, contractors, and lenders.
What Does Builder’s Risk Insurance Cover?
Coverage varies by carrier and policy, but Builder’s Risk Insurance may provide protection for many common construction-related risks.
Building Under Construction
Coverage may help pay to repair or rebuild the structure if it’s damaged by a covered cause of loss while construction is underway. This may include:
- New construction
- Home additions
- Major renovations
- Commercial remodeling
- Tenant fit-outs
Building Materials
Coverage may apply to building materials, fixtures, and supplies that will become part of the completed project. This may include materials on the job site, in temporary storage, or in transit (depending on the policy).
Fire
Construction sites are particularly vulnerable to fire due to temporary electrical systems, hot work, and exposed building materials. Builder’s Risk Insurance may help cover damage caused by a covered fire.
Theft & Vandalism
Construction materials, tools, appliances, and fixtures are common targets for theft. Coverage may help protect covered building materials and fixtures from theft or vandalism, subject to policy terms.
Wind & Storm Damage
High winds, hail, and severe weather can damage partially completed structures. Builder’s Risk Insurance may provide protection for covered weather-related losses.
What Isn’t Typically Covered?
While Builder’s Risk Insurance provides valuable protection, certain losses are generally excluded. Coverage typically does not include:
- Employee theft
- Normal wear and tear
- Faulty workmanship
- Defective design
- Mechanical breakdown
- Flood damage (unless added)
- Earthquake damage (unless added)
Additional endorsements may be available for certain exposures.
Who Should Consider Builder’s Risk Insurance?
Builder’s Risk Insurance is recommended for anyone with a financial interest in a construction or renovation project. This includes:
Many lenders require Builder’s Risk Insurance before financing construction projects.
Construction Projects in New Jersey Face Unique Risks
Building and renovation projects throughout New Jersey face a variety of challenges that can increase construction-related risks.
Severe Weather
Thunderstorms, hurricanes, nor’easters, snow, and high winds can damage partially completed structures and delay projects.
Material Theft
Construction sites often contain valuable lumber, copper piping, appliances, HVAC equipment, and tools that are attractive targets for theft.
Rising Construction Costs
Labor shortages and increasing material prices can significantly increase rebuilding costs following a covered loss. Reviewing project values regularly can help ensure adequate insurance protection throughout construction.
Delayed Projects
Permit delays, weather conditions, and supply chain disruptions can extend construction schedules. Your insurance policy should be reviewed if the project timeline changes significantly.
Common Builder’s Risk Insurance Claims
Fire During Construction
An electrical fire damages a home addition before construction is completed.
Theft of Building Materials
Copper plumbing materials and appliances are stolen from a residential construction site overnight.
Wind Damage
Strong winds damage roof trusses and framing before exterior walls are completed.
Water Damage
A burst temporary water line damages newly installed drywall and flooring during renovation.
Did You Know?
Many Homeowners Insurance policies provide limited or no coverage for major renovations or new construction.
If you’re significantly increasing the value of your home or completing a major remodel, it’s important to review your insurance before construction begins.
Is Builder’s Risk Insurance Right for You?
You may want to consider Builder’s Risk Insurance if you:
- ✅ Are building a new home
- ✅ Are adding an addition to your home
- ✅ Are completing a major kitchen or bathroom renovation
- ✅ Own commercial property under renovation
- ✅ Are constructing a new office, warehouse, or retail building
- ✅ Have a lender requiring Builder’s Risk coverage
- ✅ Have valuable building materials stored on-site
If you answered yes to any of these, Builder’s Risk Insurance may help protect your investment while construction is underway.
Frequently Asked Questions
Is Builder’s Risk Insurance required?
While it’s not required by law, many banks and lenders require Builder’s Risk Insurance before financing a construction project.
Does Homeowners Insurance cover renovations?
It depends on the scope of the project. Minor repairs may be covered, but major renovations, additions, or new construction often require additional coverage or a Builder’s Risk policy. Our advisors can help determine what’s appropriate for your project.
Who purchases Builder’s Risk Insurance?
Depending on the project, the policy may be purchased by the property owner, the general contractor, the builder, or the developer. We’ll help determine who should carry the coverage based on your construction contract.
Does Builder’s Risk Insurance cover contractors’ tools?
Generally, no. Contractors’ tools and equipment are often insured under an Inland Marine or Contractors Equipment policy.
When does Builder’s Risk Insurance end?
Coverage typically ends when construction is completed, the building is occupied, or ownership transfers, depending on the policy. Our advisors can help explain how your policy applies.
Related Commercial & Personal Insurance Coverages
Builder’s Risk Insurance is commonly paired with:
Together, these coverages help protect your project from planning through completion.
Why Choose Generazio Associates?
Construction projects involve significant financial investments, and unexpected setbacks can quickly become costly.
At Generazio Associates, we work with homeowners, contractors, builders, and commercial property owners to understand their projects and recommend Builder’s Risk Insurance tailored to the scope of work.
As an independent insurance agency, we compare options from multiple commercial insurance carriers to help you protect your project from groundbreaking to completion.
When you work with our team, you’ll receive:
- Access to multiple top-rated insurance carriers
- Coverage recommendations tailored to your project
- Guidance on construction-related risks
- Responsive local service
- Experienced insurance advisors
Request a Builder’s Risk Insurance Quote
Whether you’re building a new home, renovating a commercial property, or investing in a major construction project, protecting your investment starts before the work begins.
Contact Generazio Associates, Inc. today for a complimentary Builder’s Risk Insurance review. We’ll compare your options, answer your questions, and help you find coverage designed to protect your project every step of the way.
