A fire rips through a half-finished building overnight. Materials are destroyed. Crews are delayed for months. And then the surprise hits: the general contractor assumed their standard liability policy would pay for the damage—but it doesn’t. Without builders risk insurance, that kind of loss can turn a profitable project into a financial crisis fast.
Construction sites face a unique mix of risks that don’t exist once a building is finished. Weather, theft, vandalism, accidental damage, and job-site hazards can wipe out weeks (or months) of progress in a single incident. If you’re building new, renovating, or managing multiple projects in 2026, understanding builders risk insurance is one of the smartest steps you can take to protect your investment.
Understanding Builders Risk Insurance
Builders risk insurance (also called course of construction coverage) is a specialized property policy designed to protect a structure while it’s being built or renovated. It fills the gap between “vacant land” and “finished building,” when the project is most vulnerable and standard property insurance often won’t apply.
A typical builder’s risk policy helps protect:
- The building or structure under construction
- Construction materials and supplies on-site
- Materials in transit (if included by the policy)
- Materials stored off-site (if included by endorsement)
- Temporary structures like scaffolding, fencing, and job-site trailers (when included)
- Fixtures and equipment that will become part of the finished structure
This type of construction insurance is usually written for a specific project and period of time. Coverage typically starts at the beginning of construction (or when materials arrive on-site) and ends when the project is completed, occupied, or put to its intended use—depending on policy terms.
Who Needs Builders Risk Insurance?
Anyone with a financial stake in a project should understand builders risk coverage. Responsibility for buying the policy is often spelled out in the construction contract, and different arrangements are common depending on project type.
Builders risk insurance is commonly purchased by:
- Property owners protecting the full value of their investment
- General contractors (especially under design-build agreements)
- Developers building spec or pre-sold projects
- Commercial property owners expanding or renovating facilities
- Real estate investors developing or rehabbing properties
Lenders may also require builders risk coverage as a condition of financing, and they may specify minimum limits or endorsements.
What Does Builders Risk Insurance Cover?
Coverage varies by carrier and policy form, but most builders risk policies are designed to cover direct physical loss or damage to the covered property during construction. In practical terms, that means your policy is meant to pay for repairs or replacement when something unexpected damages the project.
Standard Coverage Components
Structure Coverage: Protects the building under construction, including the foundation, framing, roof, and permanent installations.
Materials and Supplies Coverage: Protects building materials and supplies intended to become part of the finished structure—often on-site and sometimes in transit or in temporary storage (depending on endorsements).
Temporary Structures: Many policies can include coverage for scaffolding, fencing, and similar structures used to complete the project.
Renovation Coverage: For renovation work, builders risk can often be tailored to cover the new work plus portions of the existing structure—this is especially important when you’re remodeling an occupied or partially occupied property.
Common Covered Causes of Loss
Most builders risk policies cover a broad list of “perils” such as:
- Fire and smoke
- Wind and hail
- Lightning
- Explosion
- Theft (with conditions and security requirements)
- Vandalism and malicious mischief
- Vehicle or aircraft damage
- Certain types of collapse during construction
- Water damage (often excluding flood)
Many carriers also offer endorsements to expand coverage for project-specific risks.
What Builders Risk Insurance Usually Does NOT Cover
Just as important as coverage is what’s excluded. Builders risk insurance typically does not cover:
- Employee injuries (that’s workers’ compensation)
- Contractor tools and mobile equipment (that’s usually inland marine / equipment coverage)
- Faulty workmanship, faulty materials, or design defects (though resulting damage may be covered depending on form)
- Normal wear and tear
- Flood (unless endorsed or paired with separate flood coverage)
- Earthquake (unless endorsed)
- Delay penalties (unless you purchase “delay in completion” / soft costs coverage)
Because exclusions and wording vary, reviewing the policy form matters just as much as the premium price.
Builders Risk vs. Other Construction Insurance
Builders risk is only one piece of a complete construction insurance program. The biggest mistakes happen when businesses assume one policy covers everything.
Builders Risk vs. General Liability
General liability insurance is designed for third-party claims (like property damage or bodily injury to someone else). Builders risk is designed to protect the project property itself. If the structure burns, liability coverage typically won’t rebuild it—builders risk is the policy built for that job.
Builders Risk vs. Surety Bonds
Surety bonds (like performance and payment bonds) guarantee completion and payment, but they are not insurance for physical loss. A bonded contractor can still suffer a major uninsured loss without builders risk in place.
Builders Risk vs. Wrap-Up Programs (OCIP/CCIP)
Large projects sometimes use wrap-up programs that bundle multiple coverages under one umbrella. Builders risk may be included, but not always—so it should be confirmed in writing during project planning.
How Much Does Builders Risk Insurance Cost in 2026?
Builders risk insurance cost depends on your project details. Most policies are priced as a percentage of the completed project value, often somewhere in the range of 1% to 4%, though certain projects can be higher.
Key Factors That Influence Premium
- Total project value (the biggest driver)
- Construction type (wood frame often costs more than steel or masonry)
- Location (crime rates, wildfire zones, hurricane exposure, etc.)
- Project duration (longer timelines increase exposure)
- Security controls (fencing, lighting, cameras, locked storage)
- Optional endorsements (flood, earthquake, soft costs, transit/storage expansions)
Typical Cost Ranges
- Residential new construction: ~1%–4% of project value
- Commercial new construction: ~1%–3% of project value
- Renovation projects: ~1.5%–5% of project value
- Higher-risk builds (coastal, high-rise, wildfire zones): ~3%–6% of project value
These are general planning ranges. The actual quote depends on underwriting and project specifics.
Best Practices to Protect Your Project and Your Coverage
Insurance is a financial safety net—but reducing the chance of loss is still the goal. Strong job-site controls can also improve pricing and prevent claim disputes.
Before You Buy
- Confirm who is responsible for purchasing builders risk in the contract
- Verify the completed value used for limits (avoid underinsuring)
- Review transit and off-site storage needs (endorse if needed)
- Ask about soft costs if delays would create major financial exposure
During the Project
- Document deliveries, storage, and project milestones
- Use secure storage and job-site access controls to reduce theft
- Report scope, value, or timeline changes to the insurer promptly
- Coordinate with subs so there are no coverage gaps or misunderstandings
If You Need to File a Claim
- Secure the site and prevent additional damage
- Document damage immediately (photos, video, inventory lists)
- Notify the carrier right away and follow claim instructions
- Keep receipts and records for cleanup and emergency mitigation
Builders Risk Trends to Watch in 2026
Builders risk underwriting continues to evolve. In 2026, contractors and owners should pay extra attention to:
- Climate-driven pricing: wind, wildfire, and flood-related restrictions and higher deductibles in some areas
- Supply chain volatility: replacement cost and material availability affecting limits and claim timelines
- Technology and monitoring: cameras, sensors, and site security increasingly impacting underwriting decisions
- Green construction: endorsements and documentation needs for sustainable materials and specialized systems
Conclusion
Builders risk insurance protects the structure, materials, and progress you’ve invested in during the most vulnerable stage of a project—construction. It doesn’t replace liability coverage, workers’ comp, or equipment policies, but it fills a critical gap that standard policies often leave open.
If you’re building in 2026, don’t assume you’re protected because you “have insurance.” The right protection comes from a builders risk policy designed for your project value, timeline, location, and contract structure.
Ready to protect your next build? Talk with a licensed construction insurance specialist to review your project details, confirm contract requirements, and structure builders risk coverage that matches your real exposure—before the first material delivery hits the site.
