Builder’s Risk Insurance Explained: Coverage, Exclusions, and Best Providers
From single-family builds to high-rise renovations, builder’s risk insurance is the core property policy that protects a project while it’s under construction. This article explains what it covers, where it stops, country-specific notes for the US/UK/CA/AU, how much it can cost (with a sample table), what to look for in quotes, and which providers are widely used—plus a downloadable pre-bind checklist you can hand to your broker.
What’s inside
What is builder’s risk insurance?
Builder’s risk insurance (also called course of construction) is a property policy designed to protect materials, supplies, equipment, and the partially completed structure while a project is being built or renovated. If a covered peril—such as theft, fire, vandalism, or many types of weather events—damages the works in progress, this policy helps pay to repair or replace them.
Unlike general liability (which pays third-party injury or property damage claims), builder’s risk deals with the project itself. It usually starts when site mobilization or construction begins and ends at substantial completion, occupancy, or policy expiration—whichever first applies (policy wording controls).
- Who buys it? Owner, developer, or general contractor—depending on contract terms (AIA/JCT/CCDC/AS forms commonly specify).
- What projects? New builds, additions, renovations, interior fit-outs, heavy civil (where eligible), modular and off-site fabricated projects (with off-site storage/transit coverage).
- Why vital? Prevents funding gaps and delays; lenders typically require it.
Core coverages & helpful add-ons
Typically covered
- Materials, supplies, and partially completed work on site.
- Theft and vandalism of building materials (subject to conditions).
- Fire, lightning, explosion, vehicle impact, aircraft and many weather-related perils.
- Temporary works (scaffolding, forms, falsework), site signage, fencing—up to sublimits.
- Transit and off-site storage of project materials (limits may apply per conveyance/location).
- Debris removal, expediting and temporary protection after a loss.
- Testing & commissioning for MEP systems when endorsed.
Valuable endorsements
- Existing structure coverage (for renovations) with clear limits/perils.
- Ordinance or Law / code upgrades after a covered loss.
- Delay in Completion (DSU/ALOP) for soft costs and lost income if a covered loss delays opening.
- Permission to occupy / partial occupancy during final stages.
- Green upgrades (rebuild to sustainability standards when practical).
- Increased limits for transit and off-site storage; international shipments if needed.
Key exclusions you must manage
Builder’s risk policies are broad but not limitless. Expect exclusions and conditions like these (wording varies; always read your schedule and form):
- Wear, tear, deterioration, rust, latent defect—unless ensuing damage from a covered peril.
- Faulty design, materials, or workmanship—often excluded; some policies give limited resultant damage.
- Employee dishonesty (separate crime coverage needed).
- Pollution/contamination (except sudden & accidental if endorsed); asbestos/lead commonly excluded.
- Cyber/electronic data losses to controls/automation unless endorsed.
- Mechanical breakdown during testing unless testing coverage is added.
- War, nuclear, terrorism (terror may be buy-back or country-specific pool).
- Water damage from poor protection if site procedures (roofing, heaters, sensors) weren’t followed.
How much does builder’s risk insurance cost?
Pricing is typically a function of project value, term, construction type, location/cat exposures, theft/water controls, and coverage options. A common quick rule is a fraction of total completed value. To illustrate, here’s a sample-only table with hypothetical numbers (for education, not quotes):
| Region | Project Type | Completed Value | Term | Illustrative Premium Range* |
|---|---|---|---|---|
| US | New residential build | USD $500,000 | 12 months | ~$2,500–$7,500 (≈0.5%–1.5%) |
| UK | Renovation + extension (with existing) | GBP £750,000 | 10 months | ~£3,750–£13,500 (≈0.5%–1.8%) |
| CA | Commercial tenant fit-out | CAD $1,200,000 | 8 months | ~$6,000–$18,000 (≈0.5%–1.5%) |
| AU | Mid-rise apartment build | AUD $20,000,000 | 18 months | ~$160,000–$500,000 (≈0.8%–2.5%) |
*Examples only, not quotes. Actual rates depend on location (flood, wind, quake), construction type, security, water-damage controls, testing/DSU, existing structure coverage, and current market conditions.
What drives premium up or down?
- Project value & term: higher values and longer durations cost more.
- Construction class: frame/combustible typically > non-combustible/steel > fire-resistive.
- Site controls: theft deterrence, water sensors, hot-work protocols reduce losses.
- Cat exposures: flood, wind/hail, earthquake; deductibles may apply by peril.
- Coverage breadth: existing structure, DSU/ALOP, ordinance or law, testing add cost.
- Claims history & contractor experience: clean histories price better.
Best-known builder’s risk providers (by region)
Availability varies by project size and state/province. The following carriers/markets are commonly associated with builder’s risk solutions in their regions. This is not an endorsement; compare local appetite, limits, deductibles, service, and pricing.
United States
Common names include: Travelers, Zurich, Chubb, AXA XL, Liberty Mutual, CNA, The Hartford, Builders Mutual (regional), and various specialty MGAs. Appetite depends on project size, frame vs. steel, and cat exposures.
United Kingdom
Common names include: Aviva, AXA, Zurich, RSA, Allianz, QBE, and Lloyd’s syndicates via brokers. Confirm JCT clause responsibilities (who insures existing structures vs. works).
Canada
Common names include: Intact, Aviva, Travelers Canada, Zurich, Northbridge, RSA (Johnson), and specialty markets. Check provincial requirements and winter protection warranties.
Australia
Common names include: QBE, Allianz, CGU (IAG), Chubb, Zurich, and specialty underwriters via brokers. Consider cyclone/wind and bushfire exposures; some projects are placed via Lloyd’s.
How to get apples-to-apples builder’s risk quotes
- Fix the values: total completed value = hard + soft costs + change order cushion.
- Spell out coverage: existing structure (if reno), transit, off-site storage, temporary works, testing, code upgrades, DSU/ALOP, permission to occupy.
- Detail site controls: security (fencing, lighting, CCTV, guards), water-damage plan, hot-work program, winter protection.
- Specify deductibles: flood, wind/hail, EQ, water damage, all-other-perils—so quotes are comparable.
- Pin the term: expected start, substantial completion, option to extend; address phased occupancy.
- Name all parties: insureds, additional insureds, loss payees, mortgagees; lender wording.
- Share drawings/scope & schedule: especially for structural changes and long lead items.
US / UK / CA / AU highlights
United States
- Lenders often require builder’s risk with Ordinance or Law and specific named storm/flood deductibles in coastal zones.
- Large frame/apartment projects may face higher theft/water rates without robust controls.
- Consider DSU/ALOP when loan interest, architect fees, and marketing costs are significant.
United Kingdom
- Check JCT clause (A/B/C) to confirm who insures existing structures vs. the works.
- Lloyd’s markets can solve unusual risks; flood mapping and heritage protections matter on renos.
- Permission to occupy and testing cover are frequent negotiation points on complex refurbishments.
Canada
- Winter protection/water damage warranties are common; ensure heat, monitoring, and shut-off plans.
- Provincial flood/overland water endorsements vary; confirm deductibles and sublimits.
- Transit limits for cross-provincial shipments and modular units deserve special attention.
Australia
- Cyclone wind and bushfire exposures drive deductibles/conditions; verify local building standards.
- For remote sites, address water supply and firefighting access; review transit to/from ports.
- DSU/ALOP is increasingly requested for commercial and multi-residential projects.
Download: Builder’s Risk Pre-Bind Checklist
Use this quick, broker-friendly checklist to capture project facts, values, site protections, and endorsement needs—so your quotes come back faster and cleaner.
- Project snapshot, contract responsibilities, values & term
- Transit/off-site storage, testing, temporary works, code upgrades
- Cat exposures (flood/wind/EQ), water damage plan, hot-work controls
- Deductibles & sublimits, DSU/ALOP, lender wording, parties to name
- US/UK/CA/AU notes to avoid country-specific pitfalls
Builder’s Risk Insurance — FAQ
Does builder’s risk include liability?
No. Builder’s risk is a property policy for the project itself. You still need general liability for third-party injury/property damage claims and, where applicable, workers’ comp, auto, and contractors’ equipment (inland marine).
When should coverage start and end?
Start at mobilization or when you have property to insure; end at substantial completion, occupancy, or the policy’s expiration—your form will define these triggers. Ask about permission to occupy for phased turnover.
Are materials kept off-site covered?
Yes, if you add off-site storage with a per-location sublimit. Also consider transit coverage with limits that match your largest shipments.
What about faulty workmanship?
Faulty design/materials/workmanship are commonly excluded, but some policies offer limited coverage for resultant damage. Discuss options with your broker.
Do I need DSU/ALOP?
If a delay would create major soft costs (interest, marketing, architectural/admin) or lost rental/business income, consider Delay in Completion coverage. It responds when a covered physical loss causes project delay.
Final word
Builder’s risk insurance protects your budget and schedule when the unexpected hits mid-build. Nail down values, site protections, and endorsements before you go to market, and request identical terms from multiple providers. That’s how you get competitive, comparable quotes—without coverage gaps.
Disclaimer: This article is educational only—not legal, tax, or insurance advice. Coverage and pricing vary by insurer, form, and jurisdiction. Always review your policy and endorsements with a licensed professional.