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In a construction project, some risks are outside your control. Losses from theft, fire, severe weather or vandalism can impact your timeline and budget. Standard property insurance often does not protect a structure until construction is finished. That’s why builder’s risk insurance is essential. The construction specialists at Brown & Brown can help tailor policies for your specific projects.
Who Should Consider Builder’s Risk Insurance?
Any party with money tied to a construction project needs to consider builder’s risk insurance protection. This may include:
- Property owners: Because of your financial interest, losses can impact you directly
- General contractors: You have a duty to ensure the project’s progress and completion
- Developers: Throughout the build, you want to protect your investment
- Lenders: Many require proof of builder’s risk insurance to protect collateral until repayment
The project contract often outlines responsibility for purchasing the policy to prevent confusion and coverage gaps.
What Builder’s Risk Insurance Covers
Builder’s risk policies help cover direct physical loss to the project — both hard and soft costs.
Hard costs are direct expenses required for construction:
- Building materials such as steel, lumber, or concrete
- Labor and contractor costs
- On-site equipment and temporary structures
Soft costs include expenses that are not tied to materials or physical labor but are required to keep the project moving if delays occur due to covered damage:
- Design professional fees (architects, engineers)
- Accounting and legal fees
- Insurance premiums and loan interest
- Taxes or permit renewal fees
Some policies allow you to add coverage for lost revenue or unexpected expenses if project delays occur as a result of a covered claim. These options are known as “delay in completion” or “delay in startup” endorsements.
What Builder’s Risk Insurance Does Not Cover
It's important to know what a builder's risk insurance policy excludes, so you can plan for additional protections if needed. Typical exclusions include:
- Design and workmanship issues, such as faulty plans or substandard construction techniques
- Employee dishonesty or theft by those working onsite
- Wear and tear or losses from slow deterioration
- Coverage for earthquakes or floods, which usually require separate endorsements
Review your policy documents in detail to understand your coverage — and where you may need added protection.
Builder’s Risk Insurance FAQs
Builder’s risk insurance protects against damage to the property or project materials while construction is underway. General liability insurance covers third-party injuries or damage your project may cause to someone else’s property.
Builder’s risk policies are flexible. You can add coverage for job-specific risks, so your policy fits your project’s scope and complexity.
Many buyers choose endorsements for flood or earthquake risks, coverage for materials in transit, or additional protection for costs caused by project delays.
Policies can be modified to protect the higher cost of certified sustainable materials or green building elements, supporting your project’s environmental goals.
A single-project policy insures one location or project. A blanket policy covers multiple ongoing projects under one agreement, often used by contractors handling several builds at once.
State or local law may not always demand builder’s risk insurance. However, most contracts and lenders do, making it a practical necessity on professional construction projects.
To protect your project, you will need a variety of coverages in addition to builder’s risk, such as general liability and workers’ compensation. Each policy protects against different risks. Together, the policies help you manage the total cost of risk.
Basic builder’s risk insurance may not cover delays due to supply chain interruptions, but you can add endorsements to reimburse extra costs or lost income if delayed materials prevent timely completion.
Avoid errors like underestimating your project value or not updating the policy when costs increase. Always review exclusions and ensure your coverage matches the actual scope of work.
Plan ahead. Reach out to your insurer before construction is complete to arrange continuous protection. Transition your coverage as soon as your certificate of occupancy or completion is issued.
Most builder’s risk policies do not cover cyber events. You will need cyber liability insurance or a related endorsement for digital or technology-related risks on connected job sites.
Builder’s risk covers physical damage to the construction project itself. Wrap-up policies combine liability and sometimes workers’ compensation for everyone involved in the project but don’t provide property coverage.
Additional Resources
Market Trends
Our 2026 report unites Brown & Brown and Risk Strategies resources, knowledge and proven experience to deliver stronger insurance solutions for commercial insurance, employee benefits and personal insurance.
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Connect with Brown & Brown
Brown & Brown can help you safeguard your construction investments with personalized coverage solutions. Our knowledgeable team supports you through every stage — from pre-construction planning to project completion — to help reduce risk and strengthen continuity. Contact us today to discuss a builder’s risk policy that aligns with your goals.
