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What is Builder's Risk Insurance?

Existing buildings are exposed to a wide variety of threats—fire, flooding, and vandalism are just a few of the ways building structures can be harmed. However, buildings under construction aren't ready to face risks that completed buildings can withstand. There's also the chance of an accident during the construction phase, like materials being destroyed or installed incorrectly. A proper risk analysis from our Summit Insurance Group, Inc. agents can help reduce the number of threats a new construction faces, and our agents can help reveal additional threats that may need to be covered by additional policies.

Builder's risk insurance is a policy designed to mitigate the chance of loss and protect you in the event that damage is done to the building. This policy is most commonly purchased by landowners and those funding the project, although some contractors purchase it in order to have more control over how each job is insured.

This policy is mainly designed for new construction, rather than changes and improvements to existing buildings. That form of construction is usually covered by property insurance and does not need any additional coverage, although it's best to talk with an agent before starting any particularly large project just to be absolutely sure it's covered.

What Does Builder's Risk Insurance Cover? What Does It Not Cover?

Builder's Risk Insurance generally covers the owner, the lending institution, the contractor(s) performing the work, and other related parties. In addition to providing coverage for damage to the building itself, most plans also cover temporary constructs (like scaffolding), materials, and equipment being used (whether it's currently on-site or off-site). The majority of policies are written on an all-perils basis, which means that reimbursements are available for any losses except those specifically excluded.

Common exclusions from this coverage include (but are not limited to):

  • The value of the land itself
  • Employee theft
  • Damages beyond the estimated value of the construction
  • Any losses brought by law or ordinance changes
  • Damage from earthquakes
  • Losses from war, nuclear hazards, or actions by civil authority

As you can see, most of the exclusions are not likely to occur during the course of a normal construction project. The value of the land is the only one likely to change as new work is done, and you will likely need to account for any improvements or losses the next time your company prepares taxes.

Builder's Risk Insurance Policy Lengths

Most policies last until the building is no longer under construction. The exact point at which this occurs can vary—it may be when certain parts of the structure are done (but finishing work, like painting, has not been completed), up to the day it opens for business, or when the contract with the construction company ends. If you're worried about interim risks—like the building being damaged between when construction finishes and when it opens for business—talk to one of our agents and ask about extending your coverage.

 

1. "Threat/Vulnerability Assessments and Risk Analysis." WBDG. Accessed April 20, 2016. https://www.wbdg.org/resources/riskanalysis.php.

2. "Who Should Buy Builder’s Risk Insurance?" BuildingAdvisor. Accessed April 20, 2016. http://buildingadvisor.com/who-should-buy-builders-risk-insurance/.

3. "How Do I Account for Land improvements?" Questions & Answers - AccountingTools. Accessed April 20, 2016. http://www.accountingtools.com/questions-and-answers/how-do-i-account-for-land-improvements.html.

Our Location

Summit Insurance Group

108 N. Statesville Rd.
P.O. Box 2485
Huntersville, NC 28070
Main office: 704-659-2141
Toll free: 888-745-4634

Our Providers

Testimonials

ALWAYS the best customer service, I have been with Summit for years and no one--I mean no one--is better than Fiona and the Summit team with handling all your insurance needs. They go above and beyond.
Brian Terrell
I went over everything with my husband and he wanted me to thank all of you there for such great communication and care getting us set up. Our frustration with XXXX (carrier named) had reached somewhat of a volatile state. We look forward to a great relationship with Summit and all concerned. Have a great rest of your week.
Carolyn, Office Manager KCG Solutions
I've had Erie for a fair amount of time; however, I don't stay because of their policy offerings or pricing, I much like my parents whom have been with Erie for 25 or 30 years, stay because people like you are always ready to jump in and get things done. No matter the outcome, I very much appreciate your continuous effort.
Jared F.
I love this new insurance group. Excellent customer service! I’m glad we moved our business to Summit.
Randy
I am glad I was able to get a hold of you so easily using your webpage.
John N.
Thank you very much for your prompt attention to this and more importantly, getting it done!!! I should have called you sooner.
Jon T.
Thank you so much for your help in this matter. You are always so kind and very helpful!
Heather R.
You were wonderful to work with and I really appreciate the quick response to my request.
Charles L.
I am certainly glad that I made the switch to Summit Insurance and am especially happy that you are my agent.
Doug M.
You always do a great job, and I appreciate it.
James N.
There are no easy choices below; which at least tells me we have a great policy. I credit that to you, so thanks for all your diligence in helping us to put these together originally!
Andrew K.
It is great to have someone help you with such quality and kindness.
Nellie R.
I keep my personal lines insurance at Summit because of Fiona's thorough and meticulous care of my policies. She's quick with responses and always with the utmost care! She dots all her I's and crosses all her T's. I never worry that she leaves any stones unturned. She's completely objective and professional when it comes to her work. I truly appreciate that. Your office has an eye for hiring the best agents and Fiona certainly stands out above all. I just wanted to give credit where credit is due and thank you for all the professional services that your office has provided.
Vada P.
As a 4 time winner, for all 4 years we’ve been in the market keep doing what you’re doing!!! Obviously your clients appreciate you.
Five Star Professional
April , Thank you so much for your help these past two weeks. Getting the Mustangs onto a collector car type of policy like Hagerty offers has been on my to-do list for a number of years. Fortunately I haven't had to make a claim in that time...but unfortunately I've been missing out on the savings. Nevertheless as soon as I mentioned the idea to you and you told me you underwrite for Hagerty I was very interested in pursuing it. You made the transition seamless and provided significant savings while improving the coverage on my beloved Mustangs. I very much appreciate your assistance!!
Troy R.
Quick note to say thanks for your assistance on dealing with my recent car repair – the adjuster – all that. You were very helpful, responsive and couldn't have done it without you. Thanks so much!
Mary J.