What Is Builder’s Risk Insurance and Who Needs It?

Builder’s risk insurance is one of the most misunderstood coverages in the construction world, especially among artisan contractors. If you think it only applies to general contractors or developers, you’re not alone. But if you’re supplying materials, overseeing parts of a build, or managing a project from start to finish, this coverage could be what protects your business from severe financial loss.

From flooring contractors and HVAC techs to appliance installers and landscapers, builder’s risk insurance can make or break your ability to recover from job site damages outside your general liability or tools and equipment policy. This article explains builder’s risk insurance, who needs it, what it does (and doesn’t) cover, and how long it lasts.

What Is Builder’s Risk Insurance?

Builder’s risk insurance is a specialized type of commercial property insurance that covers buildings and structures while they’re under construction or renovation. It typically covers physical damage to the structure and materials caused by events like:

Fire
Vandalism
Theft
Wind and weather damage
Accidental loss during transit or onsite storage

Think of it as temporary coverage that fills the gap while something is being built or significantly improved. Take, for example, a flooring contractor working on a commercial tenant build-out who leaves pallets of hardwood flooring in the unit overnight. A burst pipe floods the space. Builder’s risk insurance could cover the damage to those materials and the partially completed work.

What Does Builder’s Risk Insurance Cover?

Builder’s risk coverage applies to the physical structure and materials involved in a project while it’s being built or renovated. While policies vary, here’s what’s typically included:

Buildings or structures under construction
Materials, fixtures, and supplies stored onsite or in transit
Temporary structures like scaffolding
Debris removal and cleanup costs after a covered loss

If an HVAC contractor stores new rooftop units on the job site and a storm topples them before installation, the builder’s risk insurance may reimburse the cost of replacing the damaged units.

What Is a Builder’s Risk Policy Timeline?

A builder’s risk policy is short-term. It usually starts on the day work begins and ends:

When the project is completed
When the building is occupied
Or on the specified policy end date

Coverage duration is flexible but typically runs 3, 6, or 12 months. You can extend it, but this usually requires an underwriting review.

Explore this helpful checklist to see what you need beyond builder’s risk coverage to keep your contracting business safe from unexpected financial losses.

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What Builder’s Risk Insurance Doesn’t Cover

It’s important to understand the limits of a builder’s risk policy. It doesn’t replace your general liability or equipment coverage. Common exclusions include:

Employee injuries (covered by workers’ comp)
Tools and contractor-owned equipment (covered under inland marine or equipment floaters)
Faulty workmanship
Wear and tear
Losses after the project is completed

To put this in real construction site terms, consider appliance technicians installing high-end kitchen packages in new homes, thinking their tools are protected under builder’s risk. But unless those tools are itemized and added to the policy, they likely aren’t.

Builder’s Risk Coverage for Artisan Contractors

Builder’s risk isn’t just for big GCs. This coverage could apply to your business if you provide materials, perform structural work, or oversee significant parts of a project.

Let’s look at how it matters for key trades:

Flooring Installers

Mid-project losses can be a nightmare, especially when flooring materials are already laid out or stored onsite. A builder’s risk policy steps in when unexpected disasters like fire or flooding damage your materials or partially completed work, helping you recover quickly without dipping into your pocket.

HVAC Specialists

Installing rooftop units, ductwork, or climate control systems often involves expensive components staged onsite before final installation. If a storm or theft damages your equipment before it’s secured, builder’s risk coverage helps reimburse your loss so you’re not left holding the bill.

Plumbers

Whether you’re roughing in water lines or preparing to install high-end fixtures, job site damage before completion can set your schedule and finances back. Builder’s risk can help cover the cost of replacing pipework, water heaters, and other plumbing infrastructure after an unexpected incident.

Electricians

Running new wiring and electrical systems can take days or weeks, and during that time, your materials are vulnerable. If a lightning strike, fire, or break-in halts your progress, builder’s risk can help replace the wiring and cover repair costs to keep the project on track.

Landscapers

Big projects often require plants, trees, and irrigation components to be staged days before installation. If a delivery is damaged by weather or stolen from the site, builder’s risk helps cover those losses, allowing you to replace them without hurting your bottom line.

Appliance Technicians

Large-scale kitchen or breakroom installations require storing costly appliances onsite. If they’re stolen or damaged before the job is completed, builder’s risk can protect your investment so you don’t lose out on product and profit.

Explore Bly Insurance Group’s specialized contractor insurance options to see how you can add builder’s risk coverage to your fully customizable policy.

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Who’s Responsible for the Builder’s Risk Policy?

This depends on the contract. Often, the general contractor or property owner secures the policy, but if you’re:

Acting as the project lead
Supplying materials
Managing your own scope of work independently

…you may be required to carry builder’s risk insurance. Read the contract closely or ask your business insurance advisor. Companies working as subcontractors may not need to hold the policy if the GC has it. However, always verify you’re listed as a named insured if your materials are onsite at a construction project.

Why Builder’s Risk Insurance Matters for Small Contractors

Many artisan contractors skip this coverage because they think they’re too small to need it. But even modest losses on a job site can cut deep into your profit margins.

Think of yourself as a one-truck plumbing business installing $10,000 worth of fixtures for a remodel. A fire breaks out in an adjacent unit before you finish, damaging your materials. If you don’t have builder’s risk and weren’t listed on the GC’s policy, you’re likely eating the loss.

Builder’s risk insurance eliminates this problem and offers peace of mind. It ensures your work, materials, and investment in a project are protected from unexpected, uncontrollable events.

Connect With Bly Insurance to Discuss a Builder’s Risk Policy That Safeguards Your Business

If you’re an artisan contractor overseeing builds, supplying materials, or coordinating any part of a construction project, it’s time to consider builder’s risk insurance as a vital part of your protection strategy.

Bly Insurance Group helps contractors like you determine if builder’s risk coverage is the right fit and build personalized policies that protect your work, materials, and reputation. Contact us to explore your options and safeguard your projects with coverage tailored to the real-world risks you face daily.

What Is Builder’s Risk Insurance and Who Needs It?