Builder's Risk Policy

A Builder’s Risk policy is an insurance product that protects commercial and residential structures while they are being renovated or built. Builders risk policies are designed to protect home builders, property flippers, and construction companies.

​

Important features

Building coverage: A Builder’s Risk policy covers the structure in the course of a renovation or rehabilitation project. It can also cover a brand new building under the course of new construction.

Building Materials:  Another important facet to this policy is the coverage for fixtures, materials or any equipment that is being installed during the renovation or new construction. These items would be covered in the event you suffered a physical loss.

Soft Costs Coverage: Builder’s Risk policies can also include coverage for soft costs. Soft costs are generally expenses that aren’t direct construction costs. These types of costs are for things like permits, architectural designs and legal fees. Certain companies will include these types of costs into a policy.

​

Types of policies (one shot versus reporting form)

• One shot policies are completed value policy forms that are written on a one-time basis. These policies can have different time frames as well. Generally, these policies can be written in 6-months, 9-months, or 1-year increments. These policies are great if you are just building or renovation a few structures every year.

• Reporting form policies are designed for construction companies that are typically working on more than ten projects per year. These policies are perfect for large construction companies and home builders.

 

Who Should Carry the Policy?

Generally, either the property owner or the contractor can take out coverage for the builder's risk policy. In most instances, it is highly recommended that the property owner take out the coverage in case there is an issue with the builder. Regardless of who takes out the coverage, all parties should be listed on the policy.