What is Builder’s Risk Insurance?

Builder’s Risk Insurance is a type of insurance policy that either a contractor or a public agency may purchase to protect the agency for damage or loss of newly installed materials on a public works construction project during construction. A public agency may be able to obtain a better premium rate than its contractors if it buys the Builder's Risk Insurance policy directly.

Builder's Risk Insurance does not cover damage to existing property. For example, if a building is being remodeled or renovated and an event such as a flood or fire damages all or part of the building, Builder’s Risk Insurance would only cover the cost of any new materials that had been installed and damaged. It would not cover the existing building. Damage to the existing building may be covered under the contractor’s Commercial General Liability Insurance policy.

Likewise, Builder’s Risk Insurance would not cover any damage caused by demolition since its purpose is to cover only the cost of damage during construction to newly installed materials on a project.