Commercial · Builders Risk
Builders risk insurance for Michigan construction projects
Builders risk insurance covers a building and its materials while it is under construction, before a standard property policy can. We match the policy to your contract, your schedule and the project's value.
Schedule a Coverage ReviewWhat is builders risk insurance?
Builders risk insurance is property insurance for a structure while it is being built or renovated. It fills the gap before a building is complete enough for a standard property policy, covering the structure and the materials and supplies that will become part of it against covered losses such as fire, wind, theft and vandalism. It is written for the length of a project rather than a standard annual term.
Who buys builders risk insurance, the owner or the contractor?
Either the property owner or the general contractor can buy builders risk insurance, and the construction contract usually decides which one. Whoever buys it, the policy should name everyone with a financial interest in the project, such as the owner, contractor, subcontractors and lender, as their interests require. Reading the contract’s insurance section before construction starts avoids paying for duplicate coverage or leaving the project uninsured.
What does builders risk insurance cover and exclude?
Builders risk generally covers the building under construction and the materials, fixtures and equipment intended to become part of it, whether on site, in transit or stored elsewhere. It commonly excludes faulty workmanship and design, wear and tear, employee theft, and contractors’ tools and equipment. Flood, earthquake and certain other perils are often excluded or limited unless added to the policy.
| Item | Typically covered | Where it stops |
|---|---|---|
| The structure | The building or renovation work in progress | Damage from faulty workmanship, design or materials |
| Materials and supplies | Materials on site, in transit or in temporary storage | Limits for off-site and transit property, which are often lower |
| Contractors’ tools and equipment | Not usually included | Covered under a separate contractor’s equipment policy |
| Liability | Not included | Injury and damage to others belongs on general liability |
When does builders risk coverage start and end?
Builders risk coverage typically starts when construction or delivery of materials begins and ends at the earliest of the policy expiration, project completion, occupancy, or the owner’s acceptance of the work, depending on the policy wording. If a project runs past schedule, the policy must be extended before it expires. Once the building is occupied, permanent property insurance needs to be in place.
- Set the policy term to the realistic schedule, with room for delays
- Check whether partial occupancy before completion ends coverage
- Arrange the permanent property policy before the builders risk ends
How should builders risk limits be set?
Builders risk limits are usually based on the completed value of the project, including materials and labor, so the policy can cover a total loss late in construction. Land value is generally excluded. Owners and lenders may also want soft-cost coverage for expenses a delay creates, such as added interest, permits and fees, which must be added separately on many policies.
Related: Commercial Property · General Liability · Commercial Bonds · Michigan Business Insurance
This page is educational and does not alter any policy. Coverage is determined by the actual policy forms, endorsements and declarations issued by the insurer.