Builder’s Risk Insurance: What It Covers & How To Get It for Your Construction Project

Builder’s Risk Insurance: What It Covers & How To Get It for Your Construction Project

When you’re starting a new construction or renovation project, there’s one type of insurance you absolutely need to have in place before work begins — Builder’s Risk Insurance. It’s designed to protect the structure while it’s under construction, along with materials, tools, and equipment that are on-site or in transit.

In this post, we’ll cover what builder’s risk insurance is, what it protects, and how to get the right policy for your project.

What Is Builder’s Risk Insurance?

Builder’s risk insurance protects your building or project while it’s being built or renovated.

It fills a crucial gap because a standard property policy only covers completed structures — not something under construction.

If a fire, theft, storm, or vandalism damages the project mid-construction, a builder’s risk policy is what steps in to cover those losses.

Common items covered include:

• The structure itself (while being built or remodeled)
• Materials and supplies on-site or stored off-site
• Equipment and tools used in the project
• Temporary structures like scaffolding or fencing
• Materials in transit to the job site

Why Builder’s Risk Insurance Matters

Without builder’s risk coverage, your project could be left completely exposed to loss during construction.

Even a small fire, windstorm, or theft can create delays, added costs, and liability disputes between owners, contractors, and lenders.

Many banks and project owners require proof of builder’s risk insurance before work begins — not only to protect their investment, but also to ensure construction can continue smoothly if something goes wrong.

How To Get Builder’s Risk Insurance

When it comes to getting coverage, there are three main ways to purchase a builder’s risk policy:

1. Going Direct to an Insurance Company

Buying directly from a carrier might seem convenient, but it often comes with trade-offs.
You won’t necessarily get lower rates, and you could miss out on key discounts, endorsements, or coverage nuances that an experienced agent would catch.

When you go direct, you essentially become your own agent — meaning any mistakes or missed coverages are on you.

2. Working With a Captive Insurance Company

Captive agents (like State Farm or Allstate) represent one carrier. They can offer solid products, but their flexibility is limited.

If their carrier doesn’t offer the right form or endorsement for your project, you’re stuck.

That “one-size-fits-all” approach might work for small residential projects, but larger commercial or mixed-use projects often require more customization.

3. Partnering With an Independent Agent

Independent agents (like myself) have access to multiple insurance carriers and can shop the market to find the best fit for your specific project type and size.

We tailor your policy to match your exact needs — whether it’s a single-family new build, a large commercial renovation, or a mixed-use development.

We can also recommend endorsements for things like:

• Debris removal
• Ordinance or law compliance
• Soft costs (e.g., architect fees or loan interest during delays)
• Temporary storage or off-site coverage

These details make a big difference when something goes wrong — and they’re often overlooked when going direct or captive.

Who Needs Builder’s Risk Coverage?

Builder’s risk insurance can be purchased by:

• Property owners and developers
• General contractors or construction managers
• House flippers or real estate investors
• Lenders or financial institutions (as a project requirement)

If you’re responsible for the construction, materials, or financing — you likely need this coverage.

Final Thoughts

Builder’s risk insurance is one of the most important (and misunderstood) parts of any construction project. It protects your investment, your timeline, and your financial peace of mind.

Before you break ground, make sure your project is protected the right way.

If you’re planning a construction or renovation project in Michigan, I’d love to help you compare options and find the perfect fit for your needs.