Builder’s risk insurance is one of those things people don’t think about until something goes wrong. Whether you're managing a ground-up build or a major renovation, there’s a lot at stake — and if a fire, theft, or storm hits mid-project, someone’s footing the bill.
The problem? Too many contractors and property owners assume builders risk insurance is handled by someone else. That’s where delays, disputes, and uncovered losses start to pile up.
In this post, we’ll break down exactly what builders risk insurance covers, when it’s required, and who’s usually responsible for the policy. If you’re involved in any stage of construction, this is one type of insurance you don’t want to guess on.
Here’s what you’ll learn:
What builder’s risk insurance actually covers — and what it doesn’t.
When the policy is typically required and by whom.
Common coverage mistakes that cost time and money.
Builders risk insurance is designed to cover buildings and structures while they’re under construction. That includes everything from residential custom homes to large commercial builds. It’s a temporary policy that starts when the project begins and ends once the job is complete or the property is occupied.
So what does it actually cover?
In most cases, builders risk insurance protects against physical damage to the structure itself and the materials on-site. This could include fire, vandalism, theft, certain types of weather damage, and even equipment breakdown in some cases — as long as it’s related to the build.
Here’s a quick breakdown of what’s usually covered:
Buildings under construction
Materials, fixtures, and supplies stored on-site
Temporary structures like scaffolding
Certain pieces of equipment used in the build
Some policies also include soft costs like lost income or interest if a project is delayed by a covered event
But there are also clear limits.
Builders risk insurance doesn’t cover general liability, injuries to workers, faulty design, or damage caused by negligence. It also won’t pay for stolen tools left in trucks off-site, and most policies have exclusions for earthquakes, floods, or wind damage unless those are added by endorsement.
If you're running a project without this type of protection in place, you're relying on luck to carry you through unexpected damage. Builders risk insurance gives you a financial safety net for the things that are often out of your control — and that alone makes it worth a closer look before the first shovel hits the dirt.
Builder’s risk insurance isn’t always optional — in many cases, it’s required before construction can even begin. Lenders, project owners, and local authorities often want proof of coverage to make sure the investment is protected during the build.
The most common trigger? Financing. If a lender is involved, they’ll usually demand a builders risk insurance policy before releasing funds. They want to know that if the structure is damaged mid-project, there’s a way to recoup losses and keep construction moving.
Here are a few other situations where it’s typically required:
New construction projects (residential or commercial)
Major renovations or structural remodels
Builds with long timelines or high material value
Jobs that require permits or municipal approval
Even if no one formally asks for it, skipping this type of policy leaves a serious gap. General liability won’t cover physical damage to the actual structure while it’s being built — and if you’re relying on someone else’s insurance to step in, that only works if they’ve bought the right coverage and named you on it.
Some clients may include a builders risk clause in the contract, but leave the details vague. That leads to problems fast — especially if damage happens and everyone assumes the other party had it handled.
Bottom line: if your work involves putting permanent materials into place — framing, concrete, electrical, roofing — it’s time to think about builders risk insurance. It’s one of the few protections that actually follows the timeline of the job and covers what's at stake during the construction process.
One of the most confusing parts of builders risk insurance is figuring out who’s actually responsible for getting the policy. The short answer? It depends on how the project is set up — but the key is that someone needs to take ownership of it, or everyone ends up exposed.
In some cases, the property owner or developer buys the policy and lists the contractor as an additional insured. Other times, especially on smaller residential jobs, the contractor handles it directly. It can even vary from one job to the next based on who’s managing the budget, pulling permits, or dealing with lenders.
Here’s a general rule of thumb:
If the owner controls the job site and materials, they usually carry the policy.
If the contractor is overseeing the entire build and handling procurement, they’re often expected to carry it.
If the project is financed, the lender may dictate who holds the builders risk insurance and how it’s structured.
This is where a lot of trouble starts. Everyone assumes someone else is handling the coverage, but no one actually verifies the policy exists — or that it includes all parties and the right coverage dates. If a claim happens during that gap, it gets messy fast.
There’s also the issue of named insureds. If your company isn’t listed on the policy and a claim is filed, you might have no legal right to payment — even if your materials or work were damaged.
So before any work begins, it’s worth having a clear conversation about who’s buying the policy, what’s being covered, and whether all contractors and subs are listed. Builders risk insurance is only useful if it’s active, current, and includes the people actually doing the work.
Builder’s risk insurance is only helpful if it’s written correctly — and a surprising number of projects end up underinsured or completely exposed due to simple mistakes. Most of these issues come down to assumptions, miscommunication, or missing details in the policy setup.
One of the biggest mistakes is assuming general liability covers property damage during construction. It doesn’t. General liability is meant for third-party injuries or damage — not the structure itself. That’s where builders risk insurance comes in, and skipping it can leave the entire job hanging if something happens mid-build.
Another common issue? No one confirms who actually purchased the policy. It’s easy to think the owner or GC “probably handled it,” but unless you’ve seen the certificate and read the coverage dates, you can’t assume you’re protected. This happens all the time, especially on jobs with overlapping contractors or developers juggling multiple builds.
Other coverage gaps worth watching out for:
Policy starts after materials are already on-site
The coverage ends too early (before project completion or sign-off)
Missing endorsements for theft, weather events, or soft costs
Contractors or subs not listed as named insureds
Even a well-written builders risk insurance policy can fail if it’s mistimed or incomplete. Construction projects move fast, and if the coverage doesn’t keep up, you’re left with out-of-pocket losses that could’ve been avoided.
Taking the time to review the policy, ask questions, and confirm all names and dates upfront isn’t overkill — it’s protection from a financial mess later.
Builder’s risk insurance is one of the most important — and most overlooked — policies on a job site. It covers the structure, materials, and progress you’ve worked hard to build, but only if it’s set up correctly from the start. Knowing when it’s required, what it covers, and who’s responsible for carrying it can save you from major financial setbacks mid-project.
If your work overlaps with other trades or extends beyond structural work — like site prep, grading, or exterior improvements — make sure your coverage aligns with your role. You can learn more about protecting your business with Landscaping Contractor Insurance from GRIT Insurance.