Builder's Risk – The Basics

February 10, 2023

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Builder’s Risk is a type of property insurance that focuses on providing coverage for buildings during the construction process. This insurance plan is important for anyone looking to be involved both financially and physically in the operation, including architects, engineers, contractors, subcontractors, building owners, or property owners. In this protection plan, insureds are covered against damage or loss of equipment, materials and/or fixtures that are used during construction or renovation. Builder’s Risk coverage is applied prior to acceptance and delivery of the building to the owner.

When it comes to Builder’s Risk, it is important to understand that this form of insurance is required in construction contracts. It is intended to afford quick claims response, to keep the momentum of the project in a continuous forward motion. All parties involved with an insurable interest in the construction project should be named on the policy and should be familiar with the basic facts regarding builder’s risk. 

There are 5 key facts when it comes to the basics of builder’s risk, here’s what you and your company should know:

What is covered?
Under a Builder’s Risk policy, property that has become or will become a permanent part of the building is covered. This would include construction forms, falsework, scaffolding, cribbing, or other temporary structures.

Key Policy Types
There are 2 types of key policy types for Builder’s Risk:

  • Special or All-Risk: Insures against all peril subject to exclusions.
  • Specified Peril: Insures against only the perils specifically named on the policy. 

Policy Exclusions 
Just like any other policy, there are a few common Builder’s Risk exclusions, that includes:

  • Faulty Materials & Workmanship
  • Specifications/Design
  • Land & Land Values

Who is covered?
Builder’s Risk covers the following, but only to the extent of their respective insurable interests:

  • Owners
  • Contractors
  • Subcontractors
  • Lienholders/Lenders

Policy Claims 
Unfortunately, there is always the chance of a claim on the project. The most common claims include:

  • Water Damage (ex: broken pipes)
  • Theft of Materials (ex: copper piping)

Not sure if you need a Builder’s Risk policy? Contact us today for additional information and speak with one of our Risk Consultants.

Learn more about the TSIB Difference!

TSIB’s Risk Consultants are currently servicing the following locations:
East Coast: New York City, NY; Bergen County, NJ; Fairfield County, CT; Philadelphia, PA
Texas: Austin, San Antonio, Houston, Dallas
California: Orange County, Los Angeles County, Riverside County, San Bernardino County, San Diego County

Topics: Builder's Risk

Written by The TSIB Team

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