Builders Risk / Course of Construction

What is Builders Risk Insurance?

Builders Risk insurance, also often referred to as a Course of Construction insurance policy, protects buildings and structures that are being built or renovated. The policy covers the cost of construction, including materials and equipment added to the property such as HVAC systems, elevators, and temporary structures such as scaffolding from the time the construction first begins, to the time the project is completed and a certificate of occupancy is issued.

Who Needs Builders Risk Insurance?

Either the General Contractor (GC) hired to do the work, or the Property Owner if they are acting as their own General Contractor, should purchase the policy. If a lender is financing the project, they’ll need to be listed as additional insured on the policy. Sometimes a GC will ask the property owner to purchase a Builders Risk policy themselves. It really depends on the language used in the contract.

Two Most Common Types of Builders Risk Policies:

1. Ground-Up – New Construction

2. Remodeling, either Structural or Cosmetic Work (Tenant Improvements)

What can be protected?

• Property Loss – Replacement Cost

• Profits – Policies can cover labor, materials and equipment used in the project, and profits at times.

• Debris Removal (after a loss)

• Building Ordinance or Law – Building codes can change from the beginning of the project through to its completion.

• Temporarily Stored Material or Equipment – while stored off the jobsite, or in transit to the jobsite

• Theft of materials from the moment deliver is made to the job site

• Coverage for materials that are installed or uninstalled

Flood  & Earthquake

These two lines of coverage are almost always excluded from insurance policies. They must be purchased as separate policies.