Ultimate Guide to Builder’s Risk Insurance – Costs, Coverage, and Top Providers

Anyone involved with a new construction project–including contractors, property owners, and architects–should consider getting or asking to be added to a builder’s risk insurance policy to protect their investments. 

In this article, you will learn all about builder’s risk insurance, including what is covered by your policy, top providers, and the factors affecting builder risk insurance costs.

What Is Builder’s Risk Insurance?

Builder’s risk insurance helps protect property and building materials during a construction, remodeling, or installation project. It covers financial damages due to accidents or catastrophes during the construction project. Once the project is complete, coverage typically ends, at which point you can purchase a different type of insurance (such as business property insurance) to protect your property. 

Who Needs Builder’s Risk Insurance?

Builder’s risk insurance can help protect anyone who could potentially lose money invested in a construction project due to an accident or covered event. Some entities may be legally required to have builder’s risk coverage before getting a building permit or starting a building or renovation project. 

Contractors or building owners are usually responsible for purchasing builder’s risk insurance, but there are a few other parties that may want to be added to the policy to help protect their financial interests.

Individuals and businesses that may want to be added to a building risk insurance policy include:

• Construction companies
• Property owners
• Subcontractors
• Architects 
• Investment companies
• Development companies
• Lenders
• Engineers

If you are a general contractor or building owner purchasing builder’s risk insurance, you can add other parties to your policy as additional insureds. Some insurance providers allow you to add additional insureds to your policy for free, while others may charge a fee.

What Does Builder’s Risk Insurance Cover?

Builder’s risk insurance can help cover damage to property, buildings, and equipment caused by accidents or catastrophes. Different insurance companies offer specific types of coverage, so you should check with your provider to ensure you have the exact policy you need.

For instance, some policies may cover damage caused by vehicle collisions or may offer additional coverage for harm caused to third parties–such as a supplier falling and getting injured while walking through the job site.

Builder’s risk insurance can help cover the costs of recovering from damage caused to building or renovation projects due to:

• Fire
• Explosions
• Storm damage from lightning or hail
• Theft
• Vandalism 
• Acts of God (events such as hurricanes)

It can protect not only buildings, but also construction materials and equipment located on the property where the project is being built, in transit, or at other sites. Some policies will also cover labor or soft costs (expenses not associated directly with construction), such as lost rental income or additional interest on loans incurred due to construction delays.

Builder’s risk insurance often does not cover damage caused by:

• Employee theft
• Earthquake or flood damage
• Everyday wear and tear
• Manufacturing defects or workmanship flaws
• Acts of war or terrorist attacks
• Rust and corrosion
• Mechanical breakdowns

Cost of Builder’s Risk Insurance

It is a good idea to purchase a policy that covers the estimated project cost, but how much does builder’s risk insurance cost? 

Several factors help determine the cost of builders risk insurance, including:

• Project location
• Project cost
• The amount of coverage you want
• How long the project will take to complete 
• Square footage of the construction site
• The quality of the construction materials
• The expertise of the contractors and subcontractors
• Any coverage add-ons, such as additional coverage for flood damage, temporary structures, or debris or pollutant clean-up costs

The cost of coverage can vary depending on the type of construction project. For instance, a residential project such as renovating a two-story home will likely cost substantially less to insure than a large public works project such as building a bridge. 

Top Providers of Builder’s Risk Insurance

Let’s look at the leading insurance companies that provide builders risk insurance. These highly rated providers offer comprehensive coverage and customized pricing to meet your unique insurance needs.

The Hartford 

Coverage

A builders insurance policy is just one of many coverage options The Hartford offers, including auto, home, and business insurance. The Hartford’s builder’s risk insurance covers material and labor costs, and expenses arising from debris removal or defective workmanship. You can add property owners, general contractors, subcontractors, and financing banks as added insureds. 

Costs covered by The Hartford’s builder’s risk insurance policy can include:

• Property replacement
• Debris removal
• Pollutant clean up and removal
• Ordinance or law (covers delays arising from changes to applicable ordinances or laws)
• Contract penalties (covers costs associated with a project that you can’t complete due to a covered event)
• Expediting expenses (costs associated with having to meet a deadline after a covered event occurs)
• Fungus, wet rot, dry rot, bacteria, and virus (covers the damage or destruction of property due to any of these factors)
• Optional architects and engineering expenses (covers the costs of hiring an architect or engineer after a covered event occurs)
• Optional escalation clause (additional coverage in case building materials and labor end up costing more than expected)

Cost

The cost for a builder’s risk policy from The Hartford depends on the type of project and construction materials and your coverage amounts and limits. The best way to get a quote is to contact an agent or broker. 

Reputation

The Hartford is not Better Business Bureau (BBB) Accredited, but it has positive reviews (4.12 out of 5 stars) on Clearsurance, an insurance provider review site. The Hartford has a 2.4 star (out of 5 stars) rating on WalletHub, a personal finance and user review website. 

Chubb 

Coverage

Chubb offers coverage for commercial and residential projects of all sizes, and its underwriters have an average of over 20 years of experience. Its builder’s risk coverage includes:

• Difference in Conditions (DIC) (expanded coverage for construction projects)
• Physical damage
• Delay in opening costs (soft costs)
• International coverage (for U.S.-based clients)
• Green endorsements (reimbursement for the replacement cost of eco-friendly materials)
• Contract penalty coverage for physical damage losses

Cost

Chubb offers builder’s risk insurance to contractors, developers, property owners, homebuilders, and companies in the Oil and Gas, Power Generation, and Heavy Chemicals industries. To get a quote, you will need to fill out an application detailing your project, including information about its:

• Statement of values
• Locations
• Limits and coverage requirements
• Delay in opening coverage requirements

Reputation

Chubb is not yet BBB Accredited but has a 3.99 rating on Clearsurance and a 2.6 user rating on WalletHub.

CNA 

Coverage

CNA specializes in providing insurance for those in the construction industry, and its underwriters are experienced in creating policies for contractors in the following fields:

• Retail
• Healthcare
• Real estate
• Transportation
• Education
• Manufacturing
• Offices
• Technology
• Hotels and hospitality
• Financial institutions

CNA’s builder’s risk insurance covers buildings, temporary structures, off-site property, property in transit, soft costs, and operational testing. CNA also provides Blanket Builder’s Risk, which combines all of a contractor’s client’s projects into one policy. 

CNA’s additional builder’s risk coverage options include:

• Construction delay costs due to a covered loss or damage
• Inflation Guard (covers inflation increases when rebuilding after a covered event)
• Arson and crime reward payments
• Debris removal
• Fire department charges
• Loss of valuable papers and records
• Loss adjustment expenses
• Ordinance or law coverage
• Expediting expenses
• Pollutant clean up and removal
• Site preparation
• Lawns, sod, trees, shrubs, and plants
• Unintentional errors and omissions (professional liability insurance against claims of negligence)

Cost

You can contact your local CNA underwriter to get a customized quote.

Reputation

CNA is BBB Accredited with an A+ rating. It does not have a Clearsurance rating but has a 3.1 rating on WalletHub.

Gallagher 

Coverage

Gallagher’s construction and contractor insurance policies can provide coverage before, during, and after construction projects. Its builder’s risk insurance is one of several policies that can be combined to ensure complete coverage, including:

• Workers’ compensation
• General liability
• Umbrella/excess property
• Riggers liability (covers the moving of other people’s property, such as with a crane)
• Pollution
• Professional liability
• Owners and contractors protective liability (OCPs) (helps cover certain bodily injury and property damage claims)

Cost

You will have to fill out a form with information about your business and insurance needs; Gallagher will get back to you about pricing by phone or email. 

Reputation

Gallagher has an A+ rating on BBB. It has no reviews on Clearsurance but has a 3.8 rating on WalletHub. 

Travelers 

Coverage

Travelers can provide builder’s risk insurance for projects including:

• Stadiums
• Arenas
• Bridges
• Renewable energy
• Educational, medical, and healthcare facilities
• Road construction

Its builder’s risk insurance policies can include:

• Temporary and permanent works, including cribbing fencing, signs, and scaffolding
• Additional insureds
• Soft costs (option for an automatic $100,000 limit plus ability to increase)
• Equipment
• Green building replacement costs
• Permission to occupy 
• Labor costs
• Building permit fees
• On-site and in-transit materials

Cost

You can use Travelers’ Find an Agent tool to contact a local agent and learn more about customized pricing.

Reputation

Travelers is not BBB Accredited but has a 4.08 Clearsurance rating and a 4.2 rating by WalletHub editors. 

Conclusion

Contractors and property owners should consider purchasing a builder’s risk policy to help protect them from paying out of pocket for financial losses due to covered events. You may also be legally required to have builder’s risk coverage before getting a building permit or beginning a construction project. 

A builder insurance policy helps protect against accidents and catastrophes, including fire, storm damage, theft, vandalism, explosions, and covered Acts of God. 

Construction companies, subcontractors, architects, investment and development companies, lenders, and engineers may ask you to add them to your builder’s risk insurance policy as added insureds. 

Builder’s risk insurance cost depends on several factors, including the type of construction project, location, size, and coverage amounts and limits. 

The five best builder’s risk insurance providers include: 

1. The Hartford
2. Chubb
3. CNA
4. Gallagher
5. Travelers

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