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Builders Risk Coverage – Part 2


Part one of this article introduced information on Builders Risk Coverage that protects commercial property that is under construction or which is being substantially renovated.

Typically, under either method, Builders Risk Coverage provides protection to any type of building under construction, regardless of the intended occupancy. This means it can even be used to cover dwellings and farm buildings during the course of construction. Builders risk coverage ends when construction is complete, and the building or structure is put to its final or intended use.

Any party with a financial interest in a building or buildings under construction may become a policyholder under a Builders Risk form. Usually the covered party must be the only the building owner, the only building contractor, or only joint ownership consisting of a building owner and a building contractor. Naturally, payment under such coverage is limited to the extent or the covered party’s financial interest.

Builders Risk coverage typically consist of a declarations page that contain important identification and coverage information, Policy Conditions (provisions that regulate how the policy operates) and causes of loss.

Protection under a Builders Risk policy may be offered under different levels that go from basic to broader levels  or protection. For example, basic coverage may provide coverage against fire, lightning, explosion, windstorm, hail, smoke, aircraft or vehicles, riot or civil commotion, sprinkler leakage, vandalism, sinkhole collapse, and volcanic action. Broader coverage could begin with basic protection and add glass breakage, falling objects, weight of snow, ice, or sleet, and water damage. Broader still would be a form that covers direct physical loss or damage from all sources of loss that are not specifically excluded or limited.

Underwriting builders risk coverage always starts with the project, the owner and the contractor. Project considerations include the length of the project, the construction of the buildings and the locations. The experience and loss history of the contractor is very important as is the financial backing by the project owner.


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