Do I need Builder's Risk Insurance?

A: It may depend on the contract and the nature of the project you're working on. You might need Builder's Risk Insurance, a Property Insurance endorsement, which covers damage to buildings while they are under construction.

Imagine this scenario: a contractor is building an addition to a client's home. The project is only 75% complete, and so far, they've spent $50,000 on materials. Unfortunately for the contractor, a windstorm blows down the unfinished addition. They'll have to rebuild completely. Luckily, he has Builder's Risk Insurance, which reimburses his small business for damages caused by the storm.

What Companies Need Builder's Risk Insurance?

Builder's Risk Insurance is important for contractors or construction professionals who…

  • Work on long-term construction projects.
  • Store expensive supplies at a jobsite.
  • Need to comply with local building codes.
  • Need to meet a contract requirement.

Standard Property Insurance only covers materials that are kept at your offices. So if property stored at a jobsite was stolen or damaged, you'd need Builder's Risk Insurance to cover the damages. Otherwise, you'd be out of luck.

When you're building a significant structure or working on a project that will take more than a day to finish, Builder's Risk Insurance can offer you the comfort of knowing that your work will be insured until it is finished and the client signs off on it.

For information on Builder's Risk Insurance costs, see our sample insurance quotes for construction professionals.

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