What Is Builders Risk Insurance & Do I Really Need It?
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Everything You Need to Know Before Starting Your Construction Project
Starting a new construction project? Whether you're building a commercial space, a custom home, or renovating a property, you're exposed to risk the moment materials hit the site. Fires, theft, weather damage—even vandalism—can derail your budget and timeline. That’s why builders risk insurance (also called course of construction insurance) is one of the most important coverages to consider before breaking ground.
But many project owners and builders are left wondering:
Do I really need it? What does it actually cover? And who should be responsible for purchasing it?
Let’s break it down.
What Is Builders Risk Insurance?
Builders risk insurance is a type of property insurance that covers buildings and structures during construction, renovation, or repair. It’s typically written for a specific project and timeframe, usually 3, 6, or 12 months.
It covers damage to:
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Buildings under construction
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Materials on-site, in transit, or stored off-site
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Temporary structures like scaffolding, fencing, and signage
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Fixtures and equipment waiting to be installed
Coverage typically kicks in once construction begins and ends when the project is completed or occupied.
Who Needs Builders Risk Insurance?
This is a common point of confusion. The party with the most at stake should typically carry the policy. That could be:
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The property owner or developer (especially if financing the project)
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The general contractor, if contractually required
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Sometimes even subcontractors, for specific project components
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In joint ventures, a co-named policy is common
Pro tip: Always check the contract and discuss with your insurance advisor to clarify who’s responsible.
What Does Builders Risk Cover?
Here’s what’s typically included:
- Fire and lightning
- Theft and vandalism
- Wind, hail, and some weather damage
- Explosion or impact by vehicles
- Water damage (from burst pipes or rain, not flooding)
- Debris removal and pollutant cleanup
- Valuable documents and construction signs
- Soft costs (extra interest, permit fees, etc.—if endorsed)
But beware of exclusions. Most policies do NOT cover:
- Earthquake or flood (unless added)
- Faulty workmanship or design (though resulting damage may be)
- Wear and tear
- Acts of war or terrorism
- Employee theft (often needs a separate fidelity bond)
How Much Does It Cost?
Premiums driven by the total cost of the completed project value. However, the pricing can vary greatly depending on:
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Construction type (frame vs. fire-resistant materials)
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Location and natural disaster risk
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Duration and value of the project
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Security measures (fencing, alarms, cameras)
Examples:
- A $1 million residential project could cost $1,200 - $4,000.
- A $3M commercial build could cost $2,500 - $6,000 for builders risk coverage.
When Should You Buy It?
This is critical:
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Too early, and you’re paying for idle time before ground breaks.
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Too late, and you might not be covered if damage happens mid-project.
The best time to bind the policy is right before the first materials are delivered or any site work begins.
Real-World Scenario: No Coverage, Big Problem
A builder began foundation work in early spring. Due to a delay, the policy was bound a week late—right after a windstorm knocked over framing and caused $60,000 in damages. The insurer denied the claim because the damage occurred before coverage began.
Lesson? Don’t wait to get this done.
Final Thoughts: Don’t Build Without a Plan
If you’re a property owner, general contractor, or developer, builders risk insurance protects the financial investment in your project. It’s not just a box to check—it’s part of a smart risk management strategy.
Work with an insurance advisor who understands the nuances of construction policies and can tailor coverage to your project’s size, location, and complexity.
Ready to Protect Your Build?
Want help reviewing or quoting a builders risk policy? Let’s talk. Our team helps construction clients across Michigan and beyond avoid gaps, overpaying, and costly delays.
If you're ready to start vetting your insurance options, we’re here to help - contact us today or request a quote and we’ll walk you through what makes our agency different.
If you’re looking for and insurance agent in Michigan. You may also like to take a look at these great resources for insurance:
Now you’re either currently investing a lot of money into your insurance policies or getting closer to making this decision. We don’t want you to make any mistakes with a decision of this magnitude. So instead of basing this huge decision on a quoted number on the computer screen or a piece of paper – we thought you’d like to know that you can work with one of the knowledge members of our team so that you can become well educated on your insurance before buying.
For more insurance and risk management guidance or questions about your policy's coverage limits, contact us today.
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About the Author
Tyler Bartosh (Connect with me on LinkedIn)
A third-generation insurance agency owner and agent since 2007, Tyler Bartosh is the consummate “insurance geek,” using his passion for business, knowledge of insurance, and advocacy for clients to help serve as the expert buyer of insurance. He helps businesses implement risk management strategies that save both time and money, so those resources can be put towards other initiatives in your company.
Away from his career in insurance, he enjoys spending time with his family & friends, volunteering throughout the community, golf, fishing, snowboarding, hiking and virtually anything outdoors and traveling to see live music. Tyler has a wife Emily (who is also an underwriter in the insurance industry), their dog Lucy and a baby girl, Sophie.
About Top O' Michigan Insurance Solutions:
At Top O’ Michigan Insurance Solutions, we pride ourselves on using our skills to provide clients with competitive pricing, stability and understanding, and peace of mind. With seven locations throughout Michigan and 24/7 client access, our team is your 'expert buyer' of insurance for home, auto, farm, boat, motorcycle, business owners, workers compensation, bonds, life and health, employee benefits and more.
We will provide unparalleled and caring service to our clients through our knowledgeable staff and give back to our employees, agency, industry and our communities. Part of our mission is to give back to the Michigan communities we serve. This is something we take action on through We Care and you can learn more about our community outreach at TOMIA247.com/WeCare.
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Disclaimer: This Blog/Web Site does not provide insurance or legal advice. This site is for educational purposes only as well as to provide you with general information and a general understanding of insurance, not to provide specific legal advice or specific contract advice. Viewing this site, receipt of information contained on this site, or the transmission of information from or to this site does not constitute a client relationship.
The information on this Blog/Web Site is not intended to be a substitute for professional insurance or legal advice. Always seek the advice of a licensed agent in your state pertaining to insurance and legal issues.
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