Builder’s Risk Insurance typically covers physical damage to the structure under construction as well as materials, equipment, and supplies on-site (and sometimes in transit). Covered causes of loss often include fire, theft, vandalism, wind, and certain types of water damage.

For example, if building materials are stolen from the site or a fire damages part of the structure before completion, the policy can help cover repair or replacement costs—keeping the project on track.

This coverage is usually purchased by project owners, general contractors, or developers, but it can also benefit subcontractors and lenders involved in the project. In many cases, contracts will specify who is responsible for securing the policy.

Anyone with a financial interest in the project should ensure coverage is in place, as construction sites are exposed to higher risks than completed buildings.

Builder’s Risk primarily covers physical damage, but some policies can be extended to include delay in completion or soft costs coverage. This may help cover financial losses such as additional interest on loans, lost rental income, or extra administrative expenses caused by a covered delay.

This type of coverage can be especially valuable for larger projects with strict timelines or financial commitments.

Common exclusions include normal wear and tear, faulty workmanship, design errors, and employee theft. Damage caused by poor planning or defective materials may also be excluded unless specific endorsements are added.

Understanding these exclusions is important, as additional policies (like liability or professional coverage) may be needed to fully protect the project.

Coverage typically begins when construction starts or when materials are delivered to the site. It usually ends when the project is completed, occupied, or handed over to the owner—whichever comes first.

It’s important to align the policy period with the full construction timeline to avoid gaps in coverage.