Are you a business owner or homeowner looking for insurance for a construction project? If so, builder’s risk insurance is an essential type of coverage to consider.

Builder’s risk insurance helps protect your property during construction and provides much-needed peace of mind if something unexpected happens.

This blog post will explain builder’s risk insurance, who needs it, how much it costs, and more to help you make an informed decision about this essential form of protection.


What is Builder’s Risk Insurance?

Builder’s Risk Insurance is a form of property insurance that safeguards against potential losses incurred during construction.

It safeguards the contractor, owner, and other stakeholders in a construction project from any financial losses due to theft, fire, vandalism, windstorms, or other covered risks. Sometimes, the policy will also cover materials onsite and any completed portions of the building.

Types of Coverage

Two types of coverage are available for builder’s risk insurance: all-risk policies and named peril policies. All-risk policies provide broader coverage than named peril policies since they cover all causes of loss except those expressly excluded by the policy, such as an earthquake or flood damage. Conversely, named peril policies to provide more limited protection since they only cover losses caused by specific perils listed in the policy, such as fire or hail damage.

Who Needs Builder’s Risk Insurance?

Business Owners

Business owners planning to build, renovate, or expand their business need builder’s risk insurance. This insurance protects them from property damage and loss during construction projects.

Additionally, business owners should consider this coverage if undertaking a significant project like building an office complex, factory, or retail store. It will protect them from financial losses due to unexpected damages caused by fire, theft, vandalism, etc.


Homeowners remodeling or adding onto their homes can also benefit from builder’s risk insurance. This policy covers property damage and loss during renovation projects, such as installing new windows or adding a deck to your house.

Contractors and Subcontractors

Contractors and subcontractors hired for construction must have builder’s risk insurance to be eligible for specific jobs. This policy covers their equipment while completing a project at another person’s home or business location.

Key Takeaway: Builder’s risk insurance is essential for business owners, homeowners, and contractors undergoing construction projects.

How Much Does Builder’s Risk Insurance Cost?

The cost of a builder’s risk insurance can vary, contingent on the magnitude and scope of the venture, its location, as well as the kind of protection needed. Generally speaking, more complex projects involving higher-value materials will require higher premiums. Therefore, it’s essential to consider all these elements when calculating how much your policy will cost.

Premium costs for construction projects generally range from half to two percent of their total value. So, for example, if you’re building a $200k home in an area with moderate risk levels (i.e., no hurricanes or earthquakes), you can expect to pay around 1% ($2k) in annual premium costs for basic coverage like fire and theft protection. On the other hand, if you’re constructing a high-rise office tower valued at $50 million in an area prone to natural disasters such as earthquakes or floods, then your premiums could be 2% or greater.

Key Takeaway: Premiums for construction coverage can vary from 1-5% of the cost, depending on details such as magnitude and locality; the more complex or precarious a venture is, the greater your premium will be.

What Does Builder’s Risk Insurance Cover?

Builder’s risk insurance is a type of property insurance that covers any physical damage or loss to a structure during construction or renovation projects. It can safeguard those involved in the construction or renovation, such as proprietors, inhabitants, contractors, and subcontractors, from fiscal detriment due to unforeseen happenings like fires, lost sales, real estate taxes, and more.

Property Damage or Loss During Construction or Renovation Projects

Builder’s risk insurance covers the project’s materials and equipment on site, such as tools and machinery. This includes new materials purchased for the job and existing onsite materials being reused. In addition to covering material costs, it protects against additional expenses incurred due to delays caused by weather conditions or other unforeseen circumstances.

How to Choose the Right Builder’s Risk Policy?

When it comes to choosing the right builder’s risk policy, several important factors need to be taken into consideration. Understanding your needs and risks is essential for finding a suitable policy that meets your requirements.

It’s also essential to compare different policies and coverage options to get the best deal possible. But, again, a knowledgeable broker can assist in making the right choice if you have any queries or apprehensions about the process.

Know What Coverage You Need

Beginning with the basics, it is essential to recognize what kind of venture you are engaging in and which type of coverage will be required to guard yourself against any potential losses caused by unforeseen occurrences such as fire or theft.

Additionally, consider any unique aspects of your project, such as size, location, or complexity, when assessing your needs so that you can choose a policy that offers sufficient protection for those specific elements.

Compare Policy Options

Once you have determined the necessary coverage for your project, it’s time to evaluate and contrast available policies and coverage options. Consider premiums, deductibles, and additional coverages like debris removal or liability protection, which may not come standard but could be beneficial should something unexpected happen during construction work.

Utilize keywords such as “compare,” “coverage,” and “protection” to ensure that you are getting the best bang for your buck while also providing yourself with a sense of security.

Key Takeaway: To maximize your savings, take the time to review various policies and coverage options and enlist the help of a broker to ensure you make the best decision.

FAQs in Relation to Builder’s Risk Insurance

What Is Typically Covered Under a Builder’s Risk Insurance Policy?

Builder’s risk insurance policies typically cover the physical destruction of property during construction. This can include anything from fire or vandalism to weather-related events like windstorms or floods.

What Is the Difference Between General Liability and Builder’s Risk?

General Liability (GL) insurance covers a business for third-party claims of bodily injury, property damage, and personal or advertising injury. It protects against financial loss resulting from lawsuits or other legal actions brought by clients, customers, or others due to the negligence of the insured party.

Builder’s risk insurance is designed to cover buildings under construction or renovation that their owners do not yet occupy. This type of policy usually covers any physical losses incurred during the building process, such as fire, theft, vandalism, and weather-related damages.

Builder’s risk policies also typically include coverage for liability associated with accidents onsite during construction work which may result in injuries to workers or bystanders.

What Is an Example of a Builder’s Risk Claim?

A builder’s risk claim is an insurance claim made when property under construction, renovation, or repair is damaged due to an unforeseen event. Destruction due to unexpected occurrences such as fire, theft, gusts of wind, and hail can all be covered under a builder’s risk claim. However, the policyholder must provide proof that the damages were caused by one of these events to receive compensation from their insurer.


Building the right builder’s risk insurance policy protects your construction project from potential losses. Before deciding on a policy, comparing coverage options and costs is wise to select the best builder’s risk insurance for your budget and needs.

Protect your construction projects with Schumacher Insurance Agency’s comprehensive builder’s risk insurance coverage. Contact us today to learn more about our reliable and affordable solutions.