Complete Guide — Updated August 2026
Complete Guide to Builders Risk Insurance: Coverage, Costs & Who Needs It — 2026
Builders risk insurance (also called course of construction insurance) covers a building or structure under construction against damage from fire, theft, vandalism, wind, and other covered perils. It protects the value of the project as it is being built — before a standard commercial property policy takes effect.
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Builders risk insurance (also called course of construction insurance) covers a building or structure under construction against damage from fire, theft, vandalism, wind, and other covered perils. It protects the value of the project as it is being built — before a standard commercial property policy takes effect.
What It Covers ✓
- ✓Damage to the structure under construction from fire, lightning, wind, hail
- ✓Theft of materials on-site or in transit to the site
- ✓Vandalism and malicious mischief
- ✓Collapse during construction
- ✓Equipment and materials stored on-site
- ✓Soft costs (architect fees, loan interest, permit fees) with endorsement
What It Does NOT Cover ✗
- ✗Contractor's tools and equipment (inland marine/equipment floater)
- ✗Worker injuries (WC)
- ✗Third-party liability (GL)
- ✗Earthquakes and floods (separate policies)
- ✗Damage after project completion (property policy takes over)
- ✗Faulty workmanship causing damage
Who Needs Builders Risk Insurance?
- →General contractors on commercial and residential projects
- →Property owners financing new construction
- →Real estate developers
- →Specialty contractors managing large projects
- →Lenders financing construction projects (often required)
How Much Does It Cost?
Residential ($500K project)
$1,500–$3,500/year
Commercial ($2M project)
$5,000–$15,000/year
Rule of thumb
0.5–1.5% of completed value/year
High-risk (coastal/flood zone)
1.5–3% of completed value
Key Terms to Know
Course of Construction
The active phase of building — from groundbreaking to substantial completion. Builders risk coverage applies during this window.
Completed Value Form
Premium is based on the anticipated completed value of the project. The most common form for residential and smaller commercial projects.
Soft Costs
Indirect costs triggered by a covered loss — architect redesign fees, additional interest on construction loans, permit re-application fees. Often coverable via endorsement.
Flood Exclusion
Standard builders risk policies exclude flood. Coastal and flood-zone projects require separate flood insurance.
How to Get Builders Risk Insurance
Estimate the completed value of the project — this sets your coverage limit
Confirm project start and estimated completion date for policy term
Add soft costs endorsement for commercial projects with significant loan interest and design fees
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