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Builder’s Risk Insurance, also known in some areas as Course of Construction, is a unique kind of property insurance. It's a form of insurance that covers a building where the building or insured area is presently being constructed. It can cover just the structure, or also the materials on-site waiting to be installed or transported to the job site and is a type of insurance that most owners will ask every contractor to carry.
The builder's risk insurance policy will pay for damages up to the coverage limit. The limit must accurately reflect the total completed value of the structure (all materials and labor costs, excluding land value). The construction budget is the best source for determining the appropriate limit of insurance. Builder’s Risk insurance policies can often be written in terms of three months, six months, or 12 months. If the project is not completed by the end of the initial policy term, it can often be extended, but usually only one time.

Understanding Builder's Risk Coverage
The builder's risk policy will provide coverage for damage done to the insured structure from a wide variety of events. Damage from the following events will be covered by most policies:

• Fire
• Wind (may be limited in coastal areas)
• Theft
• Lightning
• Hail
• Explosion
• Vandalism
• Vehicles or aircraft

You should read your builder's risk insurance policy to be familiar with its limitations and exclusions. Limited coverage is provided for collapse among other situations. Standard exclusions include:

• Earthquake
• Employee theft
• Water damage
• Weather damage to property in the open
• War
• Government action
• Contract penalty
• Voluntary parting
• Mechanical breakdown

An important exclusion that should be read in its entirety excludes coverage for damage resulting from faulty design, planning, workmanship, or materials. These types of issues might be addressed by professional liability coverage rather than a builder's risk plan. Earthquake and flood coverage may be purchased in some areas.

​Your Construction Project with Builder's Risk Insurance: A Must-Have for Home Builders
As a home builder, you invest significant time, effort, and resources into your construction projects. However, unforeseen events beyond your control, such as fire, theft, or natural disasters, can put your hard work and financial stability at risk. To safeguard your project and mitigate potential losses, it is essential to understand the importance of Builder's Risk Insurance. This comprehensive article will delve into the intricacies of Builder's Risk Insurance, discuss who needs it, and spotlight its benefits for home builders.
What is Builder's Risk Insurance? Builder's Risk Insurance, also known as Course of Construction Insurance, is a specialized insurance policy designed to protect the interests of home builders during the construction phase. It provides coverage for damage or loss to the insured property, including the building and materials, against a wide range of perils, excluding certain specified exclusions.
Who needs Builder's Risk Insurance? While Builder's Risk Insurance is not legally mandated, it is highly recommended and often required by lenders, contractors, and project owners. Home builders undertaking construction projects of various sizes, such as residential developments, remodeling projects, or custom-built homes, can greatly benefit from this coverage. Additionally, it is crucial for builders involved in commercial construction projects, including retail spaces, office buildings, and multi-unit residential complexes.
The Importance of Builder's Risk Insurance for Home Builders:
Protection against property damage: Builder's Risk Insurance covers property damage resulting from perils like fire, windstorms, vandalism, theft, and more. This coverage ensures that your investment is protected, as repairing or replacing damaged property can be a significant financial burden without insurance.
Coverage for construction materials: Builder's Risk Insurance extends coverage to construction materials stored on-site or in transit. This protects against theft, damage from inclement weather, accidents during transportation, or vandalism. This coverage is particularly beneficial in high-risk areas or when expensive materials are used.
Profit preservation: In the event of a covered loss, Builder's Risk Insurance helps home builders preserve their expected profits. It covers additional expenses, such as temporary structures, debris removal, and professional fees required to complete the project on time or repair the damaged property. This enables builders to fulfill their contractual obligations without incurring significant financial setbacks.
Enhanced reputation and client confidence: By having Builder's Risk Insurance, home builders demonstrate their commitment to protecting their clients' investments and showcasing a professional approach to risk management. This instills confidence in clients, lenders, and stakeholders, leading to enhanced reputation and increased business opportunities.
Conclusion: Builder's Risk Insurance is an indispensable tool for home builders undertaking construction projects of any scale. Its all-encompassing coverage protects against various perils, safeguards your investment, and ensures the smooth completion of your projects. By securing Builder's Risk Insurance, home builders can focus on their core competencies, minimize potential losses, and build a solid foundation for long-term success.
Remember, while this article provides valuable insights, it is essential to consult with one of our insurance professionals to determine the specific policy details that suit your needs.