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Premium adjusted for project term
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⚖️ Disclaimer: Builders risk insurance premiums vary significantly by insurer, underwriting guidelines, and specific risk factors. This calculator provides a planning estimate only. Obtain formal quotes from licensed commercial insurance brokers for accurate pricing.
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What Is Builders Risk Insurance?
Builders risk insurance (also called course of construction insurance) is a specialized property insurance policy that covers buildings and structures during the construction phase. It protects the project owner, general contractor, and lenders against losses from fire, wind, theft, vandalism, and other covered perils during construction — before a standard property insurance policy takes effect upon completion.
Builders Risk Premium Formula
Annual Premium ≈ Project Value × Base Rate × Location Factor × Deductible Factor
Typical base rates: Residential new construction 1.0%–1.5% | Commercial 0.8%–1.3%
Example: $500,000 commercial project × 1.0% rate × 1.0 market × 0.93 deductible factor = ~$4,650/year
Most policies are for 12 months with extension options if project runs over schedule
Example: $500,000 commercial project × 1.0% rate × 1.0 market × 0.93 deductible factor = ~$4,650/year
Most policies are for 12 months with extension options if project runs over schedule
What Builders Risk Insurance Covers
- Structure under construction: Foundation, framing, roofing, walls
- Materials on-site: Lumber, fixtures, equipment staged for installation
- Materials in transit: Coverage from point of purchase to job site (with endorsement)
- Equipment and scaffolding: Optional endorsement for construction equipment
- Soft costs: Architect fees, permit costs, loan interest if project is delayed by a covered loss
- Debris removal: Cleanup costs after a covered loss
💡 Who Needs It? Builders risk insurance is required by lenders for virtually all construction loans. It should be purchased by: property owners building new homes or commercial buildings; general contractors on owner-funded projects; developers. The policy should be in force from groundbreaking through final inspection. Notify your insurer immediately upon substantial completion to transition to permanent property insurance.
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Frequently Asked Questions
How much does builders risk insurance cost?
Builders risk insurance typically costs 1%–2% of the total construction project value annually. For a $300,000 home build, expect $3,000–$6,000 per year. For a $1 million commercial project: $8,000–$15,000/year. Factors affecting cost: construction type (wood frame costs more than steel/concrete), location (flood zone, hurricane zone adds 20%–40%), deductible level, coverage breadth, and project duration. Most premiums are paid upfront for the full policy term.
Who buys builders risk insurance — owner or contractor?
Either the property owner or the general contractor can purchase builders risk — it should be agreed upon in the construction contract and clearly specified. Most commonly, the property owner purchases the policy as the primary insured. The general contractor and subcontractors are then named as additional insureds. Some GCs carry their own builders risk for owner-funded projects. The construction loan agreement almost always requires the owner to maintain builders risk coverage.
What does builders risk insurance NOT cover?
Standard exclusions: earthquake and flood (available as separate endorsements); employee theft (covered by crime policy); mechanical breakdown of equipment; war and nuclear hazard; normal wear and tear; faulty workmanship (the work itself, not damage caused by it); contractor's tools and equipment (covered by contractor's equipment policy); damage to existing structures (covered by regular property policy). Review your policy exclusions carefully.
When does builders risk insurance end?
Builders risk policies terminate at the earliest of: (1) policy expiration date; (2) project completion — defined as when the building is ready for occupancy or has received a certificate of occupancy; (3) the owner takes occupancy or the building is put to its intended use; (4) property is sold; (5) the owner abandons the project. You must notify your insurer when construction is complete to transition to permanent commercial property or homeowners insurance. Operating without notification can void coverage.
Is builders risk different from general liability insurance?
Yes — they cover completely different risks. Builders risk covers physical damage to the structure and materials during construction (property insurance). General liability covers third-party bodily injury and property damage claims — e.g., if a subcontractor accidentally damages a neighbor's fence or a visitor is injured on the job site. Both are typically required: builders risk by lenders, general liability by property owners and required by law in most states for licensed contractors.
Can I get builders risk insurance for a renovation project?
Yes. Builders risk insurance for renovations (remodeling) is available but typically costs 15%–25% more than new construction due to increased complexity and risk (existing structure, occupied adjacent spaces, more varied subcontractors). Coverage options: full replacement value of existing structure plus renovation; renovation-only coverage (for the work being performed); or an endorsement to an existing property policy. Renovations exceeding 25%–30% of building value often require a standalone builders risk policy rather than an endorsement.