Building a new home? Remodeling your kitchen? Flipping a house?
Your standard homeowners insurance may not cover damage that occurs during construction.
That’s where Builder’s Risk Insurance comes in.
Whether you’re a homeowner, real estate investor, contractor, or developer, Builder’s Risk Insurance can protect your project from unexpected losses before construction is complete.
Here’s everything you need to know.
What Is Builder’s Risk Insurance?
Builder’s Risk Insurance is a temporary property insurance policy that protects a building while it is under construction, renovation, or remodeling.
It covers the structure itself along with many of the materials, supplies, and equipment used during the project.
Once construction is complete, the Builder’s Risk policy typically ends and is replaced by a standard homeowners or commercial property insurance policy.
What Does Builder’s Risk Insurance Cover?
Although coverage varies by insurance company, most policies protect against sudden and accidental losses caused by:
✅ Fire
✅ Lightning
✅ Windstorm
✅ Hail
✅ Vandalism
✅ Theft of building materials
✅ Explosion
✅ Smoke damage
✅ Vehicle or aircraft impact
✅ Certain water damage (depending on the policy)
What Property Is Covered?
Builder’s Risk policies often cover:
- The building under construction
- Temporary structures
- Building materials
- Fixtures
- Cabinets
- Flooring
- Windows
- Roofing materials
- Plumbing supplies
- Electrical materials
- HVAC equipment
- Materials stored on-site
- Materials in transit (with some policies)
What Isn’t Covered?
Builder’s Risk Insurance is not an all-risk policy.
Common exclusions include:
❌ Employee theft
❌ Faulty workmanship
❌ Poor design
❌ Wear and tear
❌ Mechanical breakdown
❌ Earthquake (unless purchased)
❌ Flood (unless added)
❌ Intentional damage
❌ Normal weather delays
Who Needs Builder’s Risk Insurance?
Builder’s Risk Insurance is recommended for:
Homeowners
Building a custom home or completing a major renovation.
General Contractors
Protecting projects while construction is underway.
Real Estate Investors
Fix-and-flip projects.
Rental property renovations.
New construction investments.
Developers
Residential developments.
Commercial buildings.
Mixed-use projects.
Property Owners
Anyone investing significant money into improving a property.
Does Homeowners Insurance Cover Construction?
Usually no.
Many homeowners assume their existing policy automatically covers remodeling.
That is often not the case.
Depending on the size of the project:
- Your homeowners carrier may require notification before construction begins.
- Coverage may be limited during major renovations.
- Some companies may suspend or restrict certain coverages until construction is completed.
Always speak with your insurance agent before starting any major project.
When Do You Need Builder’s Risk Insurance?
Builder’s Risk is commonly purchased for:
- New home construction
- Room additions
- Second-story additions
- Interior remodels
- Kitchen renovations
- Bathroom remodels
- Commercial tenant improvements
- Office renovations
- Restaurant build-outs
- Warehouse improvements
- House flips
How Long Does Coverage Last?
Most Builder’s Risk policies are written for:
- 3 months
- 6 months
- 9 months
- 12 months
Extensions are often available if construction takes longer than expected.
Coverage ends when:
- Construction is complete
- The building becomes occupied
- The property is sold
- The policy expires
Who Buys the Policy?
It depends on the construction contract.
The policy may be purchased by:
- The property owner
- The general contractor
- The builder
- The developer
Before construction starts, everyone should clearly understand who is responsible for obtaining Builder’s Risk Insurance.
Is Builder’s Risk the Same as General Liability?
No.
They protect different things.
| Builder’s Risk | General Liability |
|---|---|
| Protects the building under construction | Protects against bodily injury and property damage to others |
| Covers materials and supplies | Covers lawsuits and liability claims |
| Protects the owner’s investment | Protects the contractor’s legal liability |
Many projects require both policies.
How Much Does Builder’s Risk Insurance Cost?
Premium depends on several factors, including:
- Construction value
- Project type
- Location
- Length of construction
- Construction materials
- Security measures
- Coverage limits
- Deductible
Every project is unique, so pricing varies.
Frequently Asked Questions
Does Builder’s Risk cover theft?
Yes, many policies cover theft of building materials, although conditions and exclusions apply.
Does it cover tools?
Usually not. Contractors often need separate Inland Marine or Contractor’s Equipment coverage for tools and equipment.
Does it cover remodeling?
Yes. Builder’s Risk can be written for many remodeling and renovation projects.
Can homeowners buy Builder’s Risk Insurance?
Absolutely. Homeowners building or extensively remodeling their own homes frequently purchase Builder’s Risk coverage.
Does it include flood or earthquake?
Typically no. These coverages usually require separate endorsements or policies.
Final Thoughts
Construction projects involve significant financial investment, and unexpected events can happen before the work is finished.
Builder’s Risk Insurance helps protect your project from costly setbacks caused by fire, theft, vandalism, wind, and other covered losses while construction is underway. Whether you’re building a new home, remodeling your current one, or investing in a fix-and-flip property, having the right coverage can provide valuable financial protection and peace of mind.
Before construction begins, consult with an experienced insurance professional to ensure your project is properly insured from start to finish.
Need Builder’s Risk Insurance in California?
Whether you’re building a custom home, remodeling a kitchen, completing a fix-and-flip, or developing a commercial property, StarWest Insurance Services can help you find the right Builder’s Risk coverage.
StarWest Insurance Services, LLC
📍 Westminster Office
13752 Goldenwest St.
Westminster, CA 92683
📍 Irvine Office
15375 Barranca Pkwy, Building L
Irvine, CA 92618
☎️ Office: (714) 893-7271
📱 James C.Q. Banh: (714) 867-7799
No Broker Fees Since 1995