Feb 26, 2025

Builder’s Risk Insurance: Protecting Construction Projects from Start to Finish

Construction projects are full of moving parts — tight deadlines, expensive materials, and unpredictable risks. A single storm, a stolen truckload of materials, or an unexpected fire can bring work to a grinding halt, leading to costly delays. Without the right protection, these incidents can throw a project off course, forcing contractors and developers to absorb massive financial losses. However, builder’s risk insurance acts as a financial safety net, ensuring construction projects stay on track from groundbreaking to completion.

What Is Builder’s Risk Insurance?

Builder’s risk insurance is a specialized policy designed to protect buildings and structures while they’re under construction. It covers property damage, theft, vandalism, and weather-related incidents that could otherwise derail progress. 

Unlike standard commercial property insurance, this coverage is temporary. It typically lasts for the duration of the project, ending once construction is complete or the building is occupied.

Why Every Construction Project Needs Builder’s Risk Insurance

Along with other types of insurance, such as errors and omissions insurance and general liability, builder’s risk safeguards construction operations from beginning to end. Here’s why builder’s risk is such a crucial coverage for construction companies.

Protection Against Costly Delays

Unexpected events like fires, floods, or wind damage can cause significant setbacks. Builder’s risk insurance covers the cost of repairs and replacements, keeping the project moving without major financial strain.

Protection for Materials and Equipment

From tools and equipment to building materials, construction sites house valuable goods — both on-site and in transit — that are attractive targets for thieves. A single theft or act of vandalism can lead to thousands of dollars in losses. Builder’s risk insurance ensures that stolen or damaged items can be replaced quickly, preventing costly interruptions.

Risk Transfer and Financial Security

Without proper coverage, contractors and developers may be left footing the bill for damages. Builder’s risk insurance shifts the financial burden to the insurer, allowing businesses to focus on completing projects rather than worrying about unexpected expenses.

Tailoring Builder’s Risk Coverage to Your Project

Each construction project presents unique challenges and exposures, making it essential to customize a builder’s risk insurance policy to fit specific needs. Here’s how to align your coverage with your project’s requirements.

Assess Project Specifics

Begin by evaluating the project’s details. Understand the size and complexity of the project to determine appropriate coverage levels. Additionally, consider geographical factors, such as susceptibility to natural disasters like floods or earthquakes, which may necessitate additional coverage.

Select Appropriate Coverage Limits

Set coverage limits that reflect the total estimated value of the completed project, including materials, labor, and associated costs. This step ensures that, in the event of a loss, the policy provides sufficient funds to cover reconstruction or repairs.

Consider Policy Extensions

Standard builder’s risk policies may not cover all potential risks. Depending on your project’s specifics, you might need to add endorsements. 

For example, if the construction site is in an area prone to natural disasters, consider adding coverage for events like earthquakes or floods. Think about soft costs, too — like whether you need protection against financial losses from project delays, such as additional interest on loans, real estate taxes, or lost rental income.

Securing Construction Projects

Construction is unpredictable, but financial protection shouldn’t be. Builder’s risk insurance helps contractors, developers, and property owners manage unforeseen setbacks, keeping projects on schedule and within budget. 

At Oakwood Risk Insurance, we have the knowledge and experience to tailor your policy according to your needs. We can assess potential risks, recommend appropriate coverages, and check that your policy aligns with both the project’s demands and your financial considerations.

Don’t leave your project vulnerable or put your financial stability at risk — contact us today to discuss the right builder’s risk insurance coverage for your needs.

About Oakwood Risk Insurance

Oakwood Risk provides industry-leading insurance services, solutions, and counsel to our clients. Our professionals are valued for their ability to provide outstanding customer service, with a commitment to the relentless pursuit of value-added solutions, results, and comprehensive coverage. Visit us at www.oakwoodrisk.com.

Oakwood Risk at Work

One of our clients had been purchasing D&O insurance from the same carrier for several years. We looked at their tower and realized that not only was their primary carrier not A+ rated, they were also paying too much for the primary layer. We were able to move the coverage to A+ rated paper and save the client six figures.