Builders Risk Insurance

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While under construction, a structure has a constantly increasing value. To assure the structure is covered in relation to its value at the time of a loss, there is a special type of policy, known as Builder's Risk Insurance.

For example, if a tornado destroys a building half way through construction, the policy covers one-half of the value the building would have had if completed. If a tornado levels the building when it is three-fourths completed, the policy covers three-fourths of the completed value. You could also report an actual value completed to the insurance company on a monthly basis. That way, the coverage would stay in line with the progress made on the structure’s construction.

Builder's Risk Insurance also covers the contractor’s materials on the job site before they are utilized and any materials in transit planned for the job. The policy may be written for new construction or remodeling and renovation projects. It can also be written to cover projects such as a new room addition, a deck or a remodeled kitchen.

The contractor or developer of the property is typically the named insured of a Builder's Risk policy. The building owner or homeowner may be the named insured if they are responsible for insuring the property while under construction.