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Builder’s Risk Insurance is a form of specialized coverage, which means that only certain types of construction and renovation projects are covered. This type of insurance covers tools, equipment and products that a builder or contractor needs to get a job done. General Liability packages do not usually cover these. This is why many small contractor businesses prefer Builders Risk Insurance. This insurance is a bundle package of Liability, Builders Risk and Workers Compensation.


What does Builders Risk Insurance cover?


When you purchase this bundle, you will get coverage for stolen equipment, tools, fixtures and vandalism. However this insurance does not cover normal wear and tear of equipment, loss resulting from criminal activities, natural disasters and war, and mechanical failure.


Who needs Builders Risk Insurance? 


This insurance policy can be a good choice for homeowners hiring a contractor to work on a project. Many builders and contractors also have Builders Risk Policy. The coverage of this insurance policy is determined by the project’s contract.


Before purchasing Builders Risk Insurance, both parties should discuss who will purchase it. As a homeowner hiring a contractor, you have to know whether there is Builders Risk Coverage so that you have liability coverage. 


Builders Risk Insurance can benefit the following groups: 



  • Builders



For builders, the Builders Risk Policy is special because it may cover stolen equipment, tools, fixtures and vandalism. Builders often have to worry about theft or equipment breakdown, so this policy can give them some peace of mind. 



  • General Contractors



General Contractors find Builders Risk Insurance useful because you can insure multiple projects at the same time. This insurance coverage is a good choice for a general contractor, because it covers stolen tools, equipment, and vandalism. 



  • Developers



Developers who buy this policy have to pay premiums during the course of construction. The policy offers additional optional coverages with quarterly adjustments.  



  • Homeowners



Homeowners should seriously consider buying builders risk insurance because it covers vandalism, stolen items and damage to property or construction project. It provides coverage for any household items and/or equipment (like garages, lawn mowers, etc.) that were not present prior to starting work with a contractor.


How much does Builders Risk Insurance cost? 


There is no straightforward answer to this question. The cost of a builder’s risk insurance policy depends on several factors. Some of the factors that go into the calculation include

  • your company’s age, 
  • reputation, 
  • type, 
  • insurance track record, 
  • and location. 


However, you can be sure that the cost of the policy is directly determined by the construction cost. It can be between 1% and 4% of the construction cost. Your project’s soft costs are included in the Builders Risk Insurance rate.


Will your business benefit from Builders Risk coverage?


Builder’s Risk Insurance is a form of specialized coverage only available for certain kinds of projects, like: 

  • New construction of a building or structure
  • Remodeling of interior fixtures in a home or other building
  • Restructuring, such as removing load-bearing walls, adding a new staircase, or reinforcing a building’s foundation.
  • Installation of permanent fixtures, such as plumbing, electricity, and solar panels


Not every company in the construction industry will benefit from this bundle policy package. It is best to talk to your insurance provider to know if this insurance is a good choice for your business. The contractor insurance experts at Contractors Liability can help you today. 


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