Builder's risk

Builder's risk insurance covers a structure while it is being built or renovated, along with materials, supplies and temporary structures on site and, depending on the form, in transit or stored off site. It fills a gap, because an owner's permanent property policy often limits or excludes buildings under construction. The owner or the general contractor buys it, and the construction contract says which, who the insureds are and what the deductible is.

Coverage is usually written on a completed-value basis, using the full contract value, or on a reporting form. Most policies use a special causes-of-loss form with exclusions such as faulty workmanship, where ensuing damage may still be covered. Flood, earthquake and named storm are often sublimited, and water damage commonly carries a large deductible. Soft costs such as loan interest and delay in startup are optional. ISO's form is CP 00 20, but many carriers write builder's risk on their own inland marine forms.

The cliff is the end of coverage. A policy typically terminates at the earliest of completion, owner acceptance, occupancy or its expiration date, and a project that runs late can outlast the term. Extend the policy before that happens and line up the permanent property policy before occupancy. The guide on builder's risk insurance: covering a building while it is under construction covers cost drivers and contract requirements, and inland marine explains how it fits with equipment coverage and the rest of a contractor's program.