How to Compare Builder's Risk Insurance

Builder's risk insurance consists of a special set of policies that protect property where construction is being done for the duration of the construction project. Some builder's risk insurance policies cover more than others, so it's important to know how to compare different types of builder's risk insurance before you begin construction.


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    Determine the length of the project.
    • Builder's risk policies typically only last until the construction project is completed. Estimate the length of time the construction project will be under way and base your rate comparisons on that time frame.
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    Learn about options to covert your builder's risk insurance into permanent property insurance after the construction job is finished. Some companies could offer a discount for purchasing multiple policies.
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    Review your crew.
    • Make a list of everyone involved in the project and only insure those individuals. Builder's insurance covers the property owner, the general contractor and some subcontractors.
    • Compare basic policies with extended policies that allow you to insure all subcontractors, architects and engineers.
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    Calculate your budget.
    • This should include costs for materials and labor, but not the land cost. This is the basic construction budget that should be used as the coverage amount for your builder's risk policy.
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    Compare all-risk policies to specified-peril policies.
    • A specified-peril policy only covers specific incidents that cause damage to a listed structure on the construction site. Natural disasters and damage caused by incidents on surrounding properties are usually not covered.
    • All-risk policies cover a wider range of damage to property undergoing construction, including natural disasters. All-risk policies cost more than specified-peril policies, but will provide more peace of mind for large or long-term projects.
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    Specify the structures under construction.
    • Consider how many structures you need to insure when comparing policies. Some builder's risk policies require you to list each structure on the property being insured and costs can vary based on the number of buildings.
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    Know if fixtures are covered.
    • Find out what fixtures and components of structures are included in the builder's risk insurance. Some policies charge extra to cover boilers and electrical or ventilation systems. Compare policies that include these structural fixtures with ones that list them separately.
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    Find out about amendments.
    • Riders or endorsements are amendments or additions to a standard builder's policy. These cover specific acts of nature or damage that could occur, but cost more to add to a basic policy.
    • Consider adding an amendment or rider if you are building in an area that is prone to flooding or wildfires.
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    Compare exclusions
    • It's just as important to consider what is excluded from your builder's risk policy as it is to know what's covered. Many policies exclude pipes, foundations and underground structural components. Some also exclude fences, walkways and bridges. Determine whether you need to pay extra to include these elements.

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Categories: Insurance