Construction · Insurance Term
Builders Risk Insurance (Course of Construction)
Definition
Builders risk insurance covers a building while it is under construction or major renovation, including materials, equipment to be installed and the structure itself. It protects the project's value against covered losses such as fire, wind, theft and vandalism until the work is complete or occupied.
In Plain English
A standard property policy is designed for finished buildings. Builders risk fills the gap during construction, when the value at risk grows every month. It typically covers hard costs such as materials and labor, and can be extended to soft costs like interest, permits and lost rents, plus delay in completion.
Either the owner or the general contractor may buy it; the contract should say who. Coverage commonly ends when the building is completed, accepted or occupied. Moving in tenants early may require permission to occupy from the insurer.
Common exclusions include faulty workmanship, wear and tear and, often, flood or earthquake unless added. Contractors' own tools and equipment are usually insured separately.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical: a developer builds a $6,000,000 medical office. Halfway through, a storm tears off roof decking and soaks installed drywall, causing $250,000 of damage. The builders risk policy would typically pay the repair cost less the deductible, and a soft cost extension may cover added loan interest from the delay.
Why It Matters for Texas Property Owners
Texas projects face hail, wind and heavy rain during construction, and coastal projects may face named storm deductibles. In TWIA's coverage area, commercial buildings generally need a windstorm certificate of compliance (WPI-8) to be eligible for TWIA coverage, so windstorm inspections should be planned from the start of construction.
What to Watch For
- Confirm in the construction contract who buys builders risk and who is named on it.
- Set the limit at the full completed value of the project, including materials on site.
- Ask about soft costs, delay in completion, flood and named storm terms.
- Tell the insurer before any occupancy, and get permission to occupy if needed.
Common Questions
Does builders risk cover renovations of an existing building?
It can cover renovation work, but the existing structure is often handled separately or under specific terms. Discuss renovation projects with your agent before work begins.
When does builders risk coverage end?
Commonly at completion, acceptance, occupancy or the policy's expiration, whichever comes first. Your policy's wording controls.
Sources
Last updated October 14, 2026 · Primesure editorial team · How We Write