Builder’s Risk Insurance: What it is and why you need it

Written By Charlotte Insurance on June 13, 2018. It has 0 comments.

Your property is protected by your homeowners insurance while you occupy it, but what about while you’re building it or adding onto it? If you think your general contractor’s insurance will cover you, think again. A general contractor is usually only required to carry liability insurance for losses due to their own negligence. Your homeowners insurance typically doesn’t cover pre-construction and buildings under construction.

So how are you supposed to protect your property while it’s in the process of being built or remodeled? To do that, during the construction phase, you need builder’s risk insurance.


Builder’s risk insurance is typically purchased by the owner of a building or land for protection against your losses during the remodel or construction period. You can buy a policy to cover you and your property in one of a few situations:

  • Property renovation
  • Building new property from the ground up
  • Adding improvements to your existing property

A builder’s risk insurance policy begins when construction begins and it ends once the building is occupied. Damage to buildings, the foundation, and some property that’s meant to become a permanent part of the building that’s located in, on, or within 100 feet of the construction site are typically covered by this policy. You need a large enough policy to cover the full value of the completed project (minus the land) to make sure you have enough insurance in case the worst occurs.


You can’t rely on your contractor’s insurance to cover losses you may sustain during the construction phase. Even with a remodel or additions to your property, your property insurance likely won’t cover all situations. The smartest option is to purchase builder’s risk coverage, also known as “course of construction” insurance. While the construction is going on, you’ll have an extra layer of protection from fire, wind, and vandalism.

Builder’s risk insurance typically lasts the duration of the construction phase. You can buy policies with one year coverage, but long-term projects will need longer coverage. You may not be covered in all situations including:

  • Earthquakes, flood, acts of war
  • Intentional acts by the owner
  • Faulty design, workmanship, materials, or planning

You’ve worked hard for this remodel or construction project. You’ve made safety and protection a priority by carrying great property insurance and hiring only the best contractors. Don’t let a fire or bad storm force you to give up your dream of a new building before construction is complete or force you to spend more than you intended. With a builder’s risk insurance policy, you’ll add another layer of protection to your home or business.

Before you break ground or knock down a single wall, contact Charlotte Insurance and ask about a builder’s risk policy for your project. Let us get a quote so you can protect yourself from problems during construction you can’t predict.

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