Builders Risk.
A building under construction is not a building yet, and no ordinary property policy treats it as one.
Until a structure is complete and occupied it is an open, changing site full of materials, and standard property forms exclude it. Builders risk is written per project, for the duration of construction, on the completed value rather than what stands today.
The part people forget is soft costs. A fire does not only destroy work in place; it delays the schedule, extends loan interest, pushes back rental income and adds professional fees. Without soft cost coverage that entire second loss is uninsured.
Course of construction, in plain terms
Written per project
Not an annual policy. It runs from groundbreaking to completion and is priced on the project rather than the business.
Insured to completed value
The finished value including materials and labour, not what is standing today. Coinsurance applies against that figure.
Covers the work in place
The structure as it rises, plus materials on site awaiting installation. Fire, wind, theft and vandalism are the usual perils.
Ends at completion
Cover ceases at completion, occupancy or acceptance. Ordinary property insurance takes over from there, and the handover should be deliberate.
The second loss nobody budgets for
Physical damage is the visible loss. The delay that follows is frequently the larger one, and it is separately insured.
Extended loan interest
Construction finance continues accruing while nothing is built. On a long delay this alone can exceed the repair cost.
Lost rental or sales income
Tenants scheduled to move in, or units scheduled to close. Delay converts committed income into a hole in the pro forma.
Additional professional fees
Architects, engineers and consultants re-engaged to handle the rebuild and the resequencing.
Permit and inspection costs
Extensions, re-inspections and renewals triggered by the delay rather than the damage.
Real estate taxes and insurance
Carrying costs continue on a site producing nothing.
Marketing and re-letting
Where a completion date was announced, the cost of resetting expectations and re-marketing the space.
The gaps we see
Insured to value in place
Rather than completed value, producing a coinsurance penalty on the first partial loss.
Materials off site uncovered
Long-lead items sitting at a supplier or a storage yard. Common on projects with imported or fabricated components.
Policy expiring before completion
A fixed term against a schedule that slipped. Extensions are routine in advance and awkward afterwards.
Lender not named
Financing agreements require the lender as loss payee. Missing it delays claim payment at exactly the wrong moment.
Renovation on a standard policy
Major works make a property unsuitable for its existing form. This is one of the most common uninsured situations in property.
Partial occupancy
Occupying part of a building can terminate cover on that portion. Phased handovers need the policy written to match.
Structure the project properly
Set the value correctly
Completed value including materials and labour, with any owner-supplied items accounted for. The most common and most expensive error corrected in a conversation.
Add soft costs deliberately
Sized against loan interest, expected income and professional fees rather than picked as a round figure.
Name every interest
Owner, contractor, lender and any relevant party, so a claim pays without a dispute about who is entitled.
Then shop appetite
Project type, construction class, duration and location swing appetite sharply. Wood frame, coastal and long-duration projects are welcomed by some carriers and declined by others.
Tell us about the project and we will place it properly.
Completed value, construction type, start date and expected duration, plus whether there is financing and who needs naming. That is everything needed to structure it and price it across the market. No cost, no obligation.
Builders risk, answered plainly
Who buys the policy, the owner or the contractor?+
Either, and it should be decided deliberately rather than assumed. The owner buying gives them control over limits and claims; the contractor buying is common on smaller projects. What matters is that every party with an insurable interest is named, including the lender.
What limit should the policy carry?+
The completed value of the project, including materials and labour, not the value in place at any given moment. Under-insuring against completed value triggers a coinsurance penalty on partial losses, which is where most claims fall.
What are soft costs?+
The financial consequences of delay rather than the physical damage: extended loan interest, additional architect and engineering fees, permit extensions, and lost rental or sales income. On a delayed project this frequently exceeds the repair cost, and it is a separate coverage.
Are materials covered before they arrive on site?+
Only with transit and off-site storage coverage. Materials stolen from a supplier's yard or damaged in transit are a common loss and are not automatically included. On projects with long-lead items this matters considerably.
What is typically excluded?+
Faulty workmanship and design in themselves, though resulting damage is often covered. Earthquake and flood are usually separate. Wear, theft of tools belonging to contractors, and employee dishonesty are excluded, and mechanical breakdown of installed equipment needs a specific extension.
What happens if the project runs late?+
The policy has a fixed term, and cover ends when it expires whether or not you are finished. Extensions are routine when requested in advance and difficult once the policy has lapsed. Diary the expiry date.
When does the policy end?+
Usually at completion, occupancy or acceptance, whichever comes first. Partial occupancy before completion can end cover on the occupied portion, which surprises owners on phased projects and needs handling deliberately.
Do renovations need it too?+
Yes, and they are frequently uninsured. A major renovation makes a property unsuitable for a standard homeowners or commercial property policy, and a renovation-specific builders risk form is what responds.