Builder’s risk insurance is a specialized type of temporary property insurance that is designed to cover buildings and structures while in the course of construction or under renovation. Builder’s risk insurance helps protect the insured building from property damage for such causes of loss as: Fire, Lightning, Vehicles, Aircraft, Hail, Explosions, Theft and Vandalism. Other perils such as wind, earthquake and flood may be covered with higher deductibles or via a coverage extension or endorsement. Such policies pay for covered damages up to the policy limit which must accurately reflect the total completed value of the building or structure (all materials and labor costs, excluding land value).
Each insurance company will have unique coverage with their own policy wording. However, a comprehensive builder’s risk policies will not only offer coverage for buildings under construction or renovation including the building materials and supplies but will also provide coverage for property in transit, debris removal, temporary structures, soft costs and business income and extra expense.
Since builder’s risk policies do not include liability coverage a separate liability policy must be secured in addition to a builder’s risk policy.