Builders Risk

Builders risk is a type of property insurance for buildings under construction. It begins on the policy effective date and ends when the property is ready for use/occupancy.

Most builders risk policies cover property losses due to fire, lightning, hail, explosions, hurricanes, theft, vandalism and many other risks. Earthquake, flood and wind in beach zones are usually excluded, but coverage extensions may be purchased for projects in locations that are vulnerable to these types of risks. Other standard exclusions include ordinary wear and tear, acts of terrorism and war, employee theft, rust and corrosion, mechanical breakdowns, and damage resulting from faulty design, planning, workmanship and materials.

Generally, a basic builders risk policy covers buildings and structures while they are under construction as well as materials, supplies and equipment that are onsite, in transit and temporarily at other locations.

Coverage may also include or be extended to include the soft costs that arise when a covered loss causes a delay in a project’s completion. Lost sales or rental income, additional interest on loans, real estate taxes, and other expenses can quickly add up when construction is delayed. Builders risk protection can help minimize or eliminate the financial impact of these costs.

Other coverage may be a standard part of your policy’s provisions or purchased as an extension or endorsement. Extensions are commonly purchased for scaffolding, construction forms and temporary structures; debris removal and disposal in the event of a loss; and pollutant cleanup. Coverage may also be available to cover the cost of upgrading a construction site to meet higher “green” environmental standards.