Structuring a Builder’s Risk Insurance Program: Key Considerations for Owners and Contractors

Construction projects are inherently risky. From theft of materials to fire, flooding, or unexpected project delays, the financial stakes can be high. To mitigate these risks, construction contracts typically require the building owner, investor, or general contractor to purchase builder’s risk insurance. This specialized property insurance covers loss or damage to the unfinished building and construction materials at the job site during the course of construction.Because no two projects are the same, builder’s risk policies vary widely among insurers. A sound program not only protects physical structures but also cushions against the cascading financial consequences of project delays. Understanding the categories of covered losses and tailoring coverage to a project’s unique characteristics are essential steps toward proper protection.