Builders’ Risk insurance (also known as “course of construction,” “construction all risk,” and “contractor's all risk insurance”) provides coverage for buildings during the course of construction. Insuring your building during the course of construction provides financial protection against loss or damage to the materials, fixtures, and appliances that are intended to become an integral part of the structure, as well as the equipment being used during the construction process.
Covered risks often include fire, lightning, wind, and vandalism; however earthquake and flood coverage may be excluded from the policy.
Generally most policies are issued on an “all risk” basis subject to the completed value of the building.
I’m a general contractor, am I expected to buy this coverage?
In most cases, a builder’s risk policy will cover a number of stakeholders. Therefore, a standard policy can usually be obtained by the owner, general contractor, architect, engineer, or project manager. However, in most cases it falls to the owner to obtain the insurance coverage, unless it is a condition of the contract between the owner and the contractor that the general contractor does so.
In general, the contractor will be responsible for any losses caused by his/her own negligence, but the building owner is responsible for most other losses. Hence, the need for builders risk insurance.
Course of construction insurance can provide coverage for the full value of the finished building, or on the incremental value of the building, usually on a monthly basis. Speak with your insurance broker about the different options.
Limits of Coverage
The Builder’s Risk policy is designed to provide broad coverage, however, it does not cover all property connected to the construction project nor does it cover every risk. It is important then to discuss with your insurance broker your specific needs, as course of construction insurance is just one element in the range of insurance options for the construction industry.
You can obtain additional coverage through what is called endorsements, or through other insurance policies specifically designed to provide protection against many of the risks that are not included in a typical Builder’s Risk policy.
Some of these endorsements and/or policies include:
- boiler and machinery
- marine and transportation
- contractor’s equipment; or contractor’s leased and rented equipment
- employees’ tools
- riggers/hook liability
- Other . . .