What is Builders Risk Insurance?

Builder’s Risk (also known as Course of Construction) is a type of property insurance that provides coverage for physical damage to the insured structure during the course of construction. Coverage is also extended to construction materials at the job site that will become a permanent part of the structure. The builder's risk policy will pay for damages up to the coverage limit. The limit must accurately reflect the total completed value of the structure (all materials and labor costs, but not including land value). The construction budget is the best source for determining the appropriate limit of insurance.

The policy provides coverage for damage to the insured structure from a wide variety of events. Damage from the following events are covered by most policies:
• Fire
• Wind (may be limited in coastal areas)
• Theft
• Lightning
• Hail
• Explosion
• Vandalism
• Vehicles/Aircraft

No insurance policy covers everything. You should read your builders risk policy and familiarize yourself with its limitations and exclusions. Standard exclusions include earthquake, employee theft, flood and other water damage, weather damage to property in the open, war, government action, contract penalty, voluntary parting and mechanical breakdown. Earthquake and flood coverage may be purchased in some areas.

Extensions of coverage may be provided for certain situations. The coverage for these may be limited.

Common builder's risk coverage extensions include:
• Property in transit
• Property in temporary storage
• Fire department service charge
• Debris removal
• Valuable papers (site plans, blueprints, etc)

• A Builders Risk policy will not provide coverage for the property of others at your job site. Sub-contractors are responsible for insuring their own property. No coverage is provided for equipment or tools.

• A builder’s risk policy does not provide any type of liability coverage. Liability refers to your legal responsibility to pay for damages or injury to another person. If anyone is injured on your job site, a builder’s risk policy will NOT pay. As the lot owner, you should maintain a separate liability policy. All contractors and suppliers who are at your job site should be required to provide you proof of their own general liability, auto and worker’s compensation insurance coverage. They can do this by providing you a certificate of insurance listing you or your company as the certificate holder.

• Coverage typically ends automatically when the building is completed, occupied, sold or the policy term ends, whichever comes first. With many insurance companies, the premium for the annual policy term is considered fully earned. There will be no return premium even if the building is completed before the term of the policy ends.

This is a general summary of a generic builder’s risk insurance policy. For specific terms, coverage and exclusions you must refer to the actual policy. ONLY the original policy will determine applicable coverage and nothing stated here alters the insurance contract. You can review the basic coverage form for our Zurich Builders Risk here. However, keep in mind the actual policy issued to you will address all conditions specific to your policy. Your actual policy may or may not be issued through Zurich Insurance Company.