Builder's Risk Insurance

Buildings are subject to many different risks while under construction. They may catch fire, be damaged by high winds, or fall victim to other force majeure. Builder's risk insurance is a type of property insurance that indemnifies against losses due to fire, vandalism, lightning, wind, and similar forces. It usually does not cover earthquake, flood, acts of war, or intentional acts of the owner. Builder's Risk insurance is typically needed during construction period only. All types of buildings under construction are eligible for Builder's Risk coverage—including dwellings and farm property, which are not eligible for other commercial property insurance forms. In addition to buildings under construction, Builder's Risk coverage applies to cover the value of renovations to buildings.

It is required that Builder's Risk insurance incept on the date construction starts above the level of the lowest basement floor, or the date construction starts if there is no basement, and it is contemplated the limit of insurance will equal 100% of the value of the covered property when completed. These concepts support a rate structure which assumes an average exposure exists with no value at the beginning and full value when the coverage is terminated by cancellation upon completion.