Coverage Guide — Updated August 2026
Builders Risk Insurance for Construction Projects
Builders risk insurance covers buildings and structures under construction — protecting against property damage from fire, wind, theft, vandalism, and other covered perils during the build. Most lenders, owners, and general contractors require builders risk before a project begins.
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Builders risk insurance covers buildings and structures under construction — protecting against property damage from fire, wind, theft, vandalism, and other covered perils during the build. Most lenders, owners, and general contractors require builders risk before a project begins.
What It Covers ✓
- ✓The structure under construction
- ✓Building materials on-site or in transit
- ✓Temporary structures (scaffolding, fencing, shoring)
- ✓Equipment at the project site
- ✓Soft costs (architect/engineering fees, permitting — with endorsement)
- ✓Loss of rental income during extended restoration (with endorsement)
- ✓Fire, lightning, wind, hail, theft, vandalism, collapse
What It Does NOT Cover ✗
- ✗Finished sections turned over to owner (commercial property takes over)
- ✗Contractor's tools off-site (inland marine)
- ✗Worker injuries (workers comp)
- ✗Design flaws or faulty workmanship
- ✗Flood and earthquake (separate endorsements)
Who Needs Builders Risk Insurance?
- →General contractors on new construction
- →Property owners building new structures
- →Real estate developers
- →Building owners doing major renovations
- →Construction lenders
- →Subcontractors named as additional insureds
How Much Does It Cost?
Residential new construction
1–4% of project value
Light commercial
1–5% of project value
Heavy commercial / high-rise
2–5%+ of project value
Major renovation
1–3% of project value
Key Terms to Know
Completed Value Form
The most common builders risk form — you insure the full completed value of the project from day one. Premium is calculated on the total finished value regardless of the construction stage.
Reporting Form
You report the value of work completed at regular intervals and pay premium based on the current value at risk. More complex but can reduce upfront costs on large projects.
Soft Costs
Non-construction costs that continue or increase when a project is delayed by a covered loss — architect fees, permitting, financing costs, and professional fees. Requires a specific endorsement.
Course of Construction
The period from when construction begins until the project is completed and accepted by the owner. Builders risk coverage is active only during this period.
Hard Costs vs Soft Costs
Hard costs are direct construction costs — materials, labor, equipment. Soft costs are indirect — permits, architect fees, financing. Standard builders risk covers hard costs; soft costs require an endorsement.
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