7 Essential Builders Risk Policy Add-Ons | Protect Your Construction Project
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Top 7 Extras You Should Add to Your Builders Risk Policy
Don’t Just “Check the Box”—Here’s How to Get Real Protection for Your Construction Project
So in this post, we’re answering a critical question: What coverage options should you add to your builder's risk insurance policy to avoid nasty surprises later?
Let’s walk through 7 essential add-ons that are often overlooked—but could save your project tens (or hundreds) of thousands of dollars.
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Soft Costs Coverage
What it covers: Interest on loans, architectural fees, permit reapplications, legal/accounting fees, lost rental income, and marketing expenses due to a covered delay.
Why you need it: Say your project is delayed by 2 months due to a fire. You still owe interest on your construction loan, and your new tenant backs out. That’s not covered under standard builders risk—but with soft costs coverage, you’re protected.
Pro tip: Be sure to tailor the soft costs list to your actual budget items. Generic forms won’t cut it.
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Property in Transit
What it covers: Building materials or equipment being shipped to your job site.
Why you need it: Imagine $150,000 of HVAC units are stolen while en route from the supplier. Without this endorsement, you’re on the hook. Standard policies typically don’t extend coverage until the materials are on-site.
Ask for: Limits based on your most expensive shipment and the most common transit method.
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Property Stored Off-Site
What it covers: Materials temporarily stored off-site (like in a warehouse or staging facility) before installation.
Why you need it: If materials are stolen or damaged before arriving at the job site, you’re likely out of luck unless this coverage is included.
How to use it: Coordinate this coverage with your supply chain timelines.
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Pollutant Cleanup and Removal
What it covers: Cost to remove pollutants (chemicals, oil, hazardous waste) after a covered cause of loss.
Why you need it: A fire or storm could release toxic substances or trigger environmental cleanup. Without this endorsement, you may be required to pay out-of-pocket—even if you did nothing wrong.
Important note: Floodwater or fire runoff could be considered pollution. Always ask if “pollutants” are broadly defined.
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Ordinance or Law Coverage
What it covers: The added cost to bring a building up to code after a loss—especially important in renovation projects.
Why you need it: If you’re repairing an older building and local law requires all-new electrical systems, you could face massive costs. This coverage helps absorb the difference.
Bonus: It can also cover demolition and debris removal of undamaged parts required by code.
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Expediting Expenses
What it covers: Extra costs to speed up repairs and minimize delays (e.g., overtime labor, rush shipping of materials).
Why you need it: Every day your project is delayed can cost thousands in interest, penalties, and lost revenue. This endorsement helps you get back on track faster after a loss.
Typical limits: Usually between $10,000 and $100,000, depending on project scale.
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Testing Coverage
What it covers: Damage to systems (like HVAC, fire suppression, electrical) during testing or startup.
Why you need it: Many claims occur right when systems are being turned on. Without this endorsement, testing-related damage is likely excluded.
Perfect for: Hotels, multifamily projects, office buildings—anything with significant mechanical systems.
Final Thoughts: Don’t Build on Assumptions
Many builders risk policies are “bare bones” until you customize them. That’s fine for small projects, but if you're working on commercial builds, mixed-use developments, or anything with multiple trades and high value—you need more than basic coverage.
Work with an insurance advisor who specializes in construction and will walk you through each potential gap.
Need Help Reviewing Your Builders Risk Coverage?
We help construction clients across Michigan and beyond protect their investments with smarter, tailored insurance plans. We’ll make sure you’re covered—really covered—before your next project breaks ground.
Let’s talk.
Helpful Resources:
- IRMI Guide to Builders Risk Enhancements
- NAHB on Builders Risk Policy Add-Ons
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