Builders Risk Insurance

Builders risk insurance, also called course of construction coverage, is a temporary property insurance policy designed specifically for buildings that are being constructed, renovated, or rehabilitated. The policy covers the structure, building materials, and equipment on site against covered perils such as fire, wind, theft, and vandalism during the construction period.

For apartment developers and owners undertaking major renovations, builders risk coverage is typically required by the construction lender and is essential for protecting the investment during the vulnerable construction phase. The coverage limit should reflect the completed value of the project, increasing as construction progresses. Some policies are written on a completed value basis, where the full completed value is insured from the start, while others use a reporting form that adjusts coverage as values increase.

Key considerations for apartment builders risk policies include soft cost coverage (architectural, engineering, and financing costs that may need to be re-incurred if a loss delays the project), materials in transit and stored off-site, the treatment of existing structures during renovation, and the transition timing to a permanent commercial property policy. Builders risk policies automatically terminate at project completion or when the building is occupied, whichever occurs first.