Business Insurance  /  Builders Risk

Commercial Coverage

Builders Risk Insurance —
Coverage for Structures
Under Construction.

A building under construction isn’t finished — and it doesn’t fit neatly into anyone’s standard property policy. Builders risk is the coverage that protects the structure, the materials, and the work in progress from the day construction begins until the project is complete and handed over.

What Builders Risk Insurance Covers

Property coverage for a project while it’s being built — from groundbreaking to completion.

Builders risk insurance — sometimes called course of construction insurance — covers a building or structure while it’s under construction against physical loss or damage from covered causes. Fire, storms, vandalism, theft of materials, and other covered events during the construction period are all addressed by a builders risk policy. The coverage applies from the start of construction until the project reaches completion and ownership or occupancy transfers.

The policy covers the structure itself as it’s being built — including materials on site, materials in transit to the site, and the labor value incorporated into the work. Most builders risk policies are written on an “all risk” basis, meaning they cover all causes of loss except those specifically excluded, rather than only named perils.

Builders risk is a temporary policy — it exists for the duration of the project and ends when construction is complete. At that point, the property transitions to a permanent commercial property or homeowner’s policy. During construction, neither the contractor’s GL nor the property owner’s existing property policy adequately covers the structure — builders risk fills that gap for the entire project timeline.

“A structure under construction is exposed from the first day of work until the last. Weather, theft, fire, and accidents don’t wait for a project to be finished — and neither should the coverage.”

Builders risk policies are typically written for the completed value of the project — what it will cost to build the structure when finished, not what has been built to date. The premium is calculated on that total project value for the duration of the build. Coverage adjusts as the project progresses and can be extended if the timeline changes.

What builders risk typically covers:

✓
The structure under construction
The building or structure itself at every stage of completion — from foundation through framing, roofing, and finish work
✓
Materials and supplies on site
Building materials stored at or delivered to the job site — lumber, roofing, fixtures, and other components awaiting installation
✓
Materials in transit
Materials being transported to the job site from a supplier or storage location, typically up to a specified distance
✓
Fire and lightning
One of the most common and most costly construction losses — fire damage to a partially completed structure can total the entire project value
✓
Storm and wind damage
Wind, hail, and storm damage to a structure under construction — particularly relevant in Texas where severe weather is a consistent risk
✓
Theft and vandalism
Theft of materials from the job site and vandalism to the structure or installed components during the construction period

Why Existing Policies Don’t Cover a Construction Project

GL, commercial property, and homeowners policies each leave the structure exposed during construction.

Construction projects create a coverage gap that most business owners and property owners don’t fully recognize. Here’s exactly where each standard policy falls short — and why builders risk is the only policy designed for what happens during a build.

General Liability

GL covers third-party bodily injury and property damage caused by your operations — it does not cover physical damage to the structure being built. If a storm collapses a partially framed building, GL has no response. GL protects others from your work; it doesn’t protect your work from the world. The structure under construction is a first-party property exposure that GL is not designed to cover.

Commercial Property Insurance

Commercial property policies cover property you own at a scheduled location. A building under construction typically doesn’t qualify — it’s not a completed building at a fixed address. Even when a contractor or property owner has commercial property coverage, the policy language usually excludes buildings under construction or limits coverage so significantly that a total loss during a build would not be adequately addressed.

Homeowners Insurance

When a homeowner is having a new home built or a major addition constructed, their existing homeowners policy does not cover the construction project. The home being built is not yet an insurable residence under a homeowners policy. Until construction is complete and the homeowner moves in, the structure under construction has no coverage under a homeowners policy — regardless of who owns the land.

What Builders Risk Doesn’t Cover

Builders risk covers the structure — not everything associated with the project.

Builders risk is a property policy for the building under construction. It does not replace GL, workers’ comp, or equipment coverage — and it has specific exclusions that every project owner and contractor should understand before relying on it.

Contractor’s tools & equipment

Builders risk covers the structure and its materials — not the contractor’s tools, machinery, or equipment on the job site. Equipment coverage for what contractors bring to the job belongs under inland marine / tools and equipment insurance, not builders risk.

Third-party liability

If someone is injured on the construction site or adjacent property is damaged by construction activity, that’s a general liability claim — not a builders risk claim. GL and builders risk are complementary but separate coverages that address fundamentally different types of losses.

Employee injuries

Worker injuries on a construction site are workers’ compensation claims. Builders risk covers the physical structure — it provides no coverage for injuries to workers, subcontractors, or anyone else involved in the construction process.

Faulty workmanship

Builders risk does not cover losses caused by defective design, faulty materials, or poor workmanship. It covers external causes of loss — storm, fire, theft, vandalism. If the structure fails because of a construction error, that’s a professional liability or warranty claim, not a builders risk claim.

Flood

Like most property policies, standard builders risk excludes flood damage. Construction sites in flood-prone areas of Texas require separate flood coverage. Texas flooding regularly affects areas outside designated flood zones, particularly during severe weather events — worth discussing regardless of the project location.

Coverage after completion

Builders risk ends when the project is substantially complete and occupancy or ownership transfers. Once construction is done, the property needs a permanent commercial property or homeowners policy. Letting builders risk lapse without a permanent policy in place creates an uninsured gap — something we flag with every client at the outset of a project.

The bottom line: Builders risk requires GL, workers’ comp, and equipment coverage alongside it — not instead of them. A complete construction project insurance program addresses all four. We make sure every piece is in place before work begins.

Who Needs Builders Risk Coverage

Anyone with financial exposure to a structure under construction.

Builders risk can be purchased by the property owner, the general contractor, or both — depending on the project structure. Whoever carries the financial risk of loss during construction is the party who needs the coverage.

General Contractors

GCs on new construction projects carry significant financial exposure during the build. A builders risk policy protects the project value — including subcontractor work — from groundbreaking to completion.

Pool & Spa Builders

Pool construction projects involve significant material value — excavation, plumbing, electrical, shell, and finish work — that is exposed before the completed pool is covered under a homeowner’s policy.

Remodeling Contractors

Major renovation projects create an exposure window where the existing structure plus new materials and labor are neither adequately covered under the homeowner’s existing policy nor under a new property policy.

Property Developers

Developers building speculative or pre-sold properties carry the full financial exposure of the project from land to delivery. Builders risk covers that exposure for the entire development timeline.

Property Owners Building Custom Homes

Homeowners having a custom home built need builders risk from the start of construction until occupancy. The homeowners policy they’ll carry on the finished home doesn’t apply until the home is complete and inhabited.

Commercial Property Owners

Owners building or substantially renovating a commercial building need builders risk to protect the investment during construction — regardless of whether the contractor also carries a policy on the same project.

Subcontractors on Large Projects

Some subcontractors carry their own builders risk or installation floater coverage for their specific scope of work — particularly when the GC’s policy may have gaps or sub-limits relevant to their trade.

Lenders Financing Construction

Many construction lenders require builders risk as a condition of the construction loan. The lender’s interest in the project is protected under the policy as an additional insured or loss payee — this is often a contractual requirement, not optional.

Real Scenarios.

What builders risk actually protects you from — during the window when nothing else does.

These are the losses that happen on construction projects in Texas — all during the window between groundbreaking and completion when standard policies don’t apply.

01
A hail storm damages a partially framed structure
A severe Texas hail storm hits an active construction site. Framing is exposed, roofing materials are damaged, and windows already installed are shattered. The homeowner’s existing policy doesn’t cover it — the new home isn’t complete. The GC’s commercial property doesn’t cover it — it’s not at a scheduled location. Builders risk covers the damage and the cost to restore the project to its pre-loss condition.

03
A fire destroys months of completed work
A fire — from an electrical issue, a subcontractor accident, or an external source — damages or destroys a partially completed structure. The labor and materials incorporated into the structure can represent hundreds of thousands of dollars. Without builders risk, that loss falls entirely on whoever bears the financial risk of the project. With it, the policy covers the cost to restore the structure to its pre-loss state.

05
A pool project is damaged before completion
A pool under construction — shell poured, plumbing roughed in, equipment staged — is damaged by an unexpected rainstorm that floods the excavation. The pool isn’t finished and isn’t covered under the homeowner’s policy. The pool builder’s GL doesn’t cover the structure. Builders risk for pool projects specifically covers this gap and is particularly relevant in Texas given the volume of pool construction and unpredictable weather.

02
Building materials are stolen from the job site overnight
Lumber, copper pipe, HVAC equipment, or appliances staged at a job site are stolen overnight. Material theft from construction sites is one of the most frequent builders risk claims in Texas — and the cost of replacing stolen materials, plus the project delay, adds up quickly. Builders risk covers the materials themselves; inland marine covers the contractor’s own tools and equipment.

04
Vandalism damages a vacant construction site
An unoccupied construction site — left for a weekend or over a holiday — is vandalized. Fixtures are damaged, work is destroyed, and graffiti covers finished surfaces. Builders risk covers vandalism during the construction period, which is a meaningful exposure for projects that are actively worked on during the week but unattended on weekends.

06
A construction loan requires proof of builders risk
A property owner or developer secures a construction loan and the lender requires builders risk as a condition of funding. This is standard practice for construction lending — lenders protect their interest in the project through a builders risk policy that names them as additional insured or loss payee. Without it, the loan draw schedule may be held up and work can’t proceed. We turn these around quickly when a lender requirement needs to be satisfied.

Why Get Your Builders Risk Through McKnight

Builders risk needs to be in place before the first shovel goes in the ground.

Builders risk is one of the few insurance coverages where timing is everything. A loss that happens before the policy is bound is not covered — there’s no retroactive effective date. Contractors and property owners who wait until mid-project to think about builders risk are carrying uninsured exposure for everything that happened before coverage was placed.

We also make sure the policy is structured for the actual project. The coverage limit should reflect the completed value of the project — not the current stage of construction. Policy duration needs to account for realistic build timelines, including potential extensions. And for projects with multiple parties — owner, GC, subcontractors, lender — we make sure all interests are properly addressed on the policy.

When a project extends beyond the original timeline — which happens regularly — we handle policy extensions proactively rather than letting coverage lapse mid-project. And when a project completes, we coordinate the transition to a permanent property policy so there’s no gap in coverage between the end of construction and the start of occupancy.

Coverage bound before work starts
We move quickly to get builders risk in place before groundbreaking — a loss before the policy is bound is an uninsured loss.

Policy structured for your project
Coverage limit, duration, and named interests all set correctly for the actual project — not a generic template.

100+ carriers
We shop the market for the right builders risk program for your project type, value, and timeline.

Real answers when you call
817.277.6166, weekdays 8:30–5pm. Lender requirements, project extensions, or a loss during construction — we pick up.

FAQ

Builders risk questions we hear all the time.

What is builders risk insurance and what does it cover?
Builders risk insurance covers a structure under construction against physical loss or damage from covered causes including fire, storm, wind, hail, theft of materials, and vandalism. It applies from the start of construction until the project is substantially complete and ownership or occupancy transfers. Coverage includes the structure itself, materials on site, and materials in transit to the site. Most builders risk policies are written on an “all risk” basis — covering all causes of loss except those specifically excluded. It’s a temporary policy that exists only for the duration of the construction project.
Who buys builders risk — the owner or the contractor?
Either party can purchase builders risk, and it depends on the project structure and contractual agreements. On many projects, the general contractor purchases the policy and the property owner is named as an additional insured. On others, the property owner purchases it and the GC is named. Construction lenders often require that someone — owner or GC — maintains builders risk as a condition of the loan. The most important thing is that the policy is in place before work begins and that all parties with a financial interest in the project are properly named. We sort out the right ownership structure at the outset.
Does builders risk cover materials stolen from the job site?
Yes — theft of building materials on site is a covered cause of loss under a standard builders risk policy. Lumber, roofing materials, copper pipe, fixtures, and installed equipment staged at or delivered to the job site are covered against theft. Note that the contractor’s own tools and equipment are not covered under builders risk — those require a separate inland marine or tools and equipment policy. Builders risk covers what’s going into the building; inland marine covers what the contractor brings to do the work.
Does the homeowner’s insurance cover a home under construction?
No — a homeowners policy covers a completed, occupied residence. A home under construction is not yet a completed residence and does not qualify under a standard homeowners policy. Until construction is complete and the homeowner moves in, the structure under construction has no coverage under a homeowners policy. This is a common misconception among homeowners having custom homes built — they assume their existing coverage or the eventual policy applies during construction. It doesn’t. Builders risk is required for the construction period.
How is the coverage limit on a builders risk policy determined?
The coverage limit on a builders risk policy is typically set at the completed value of the project — the total cost to build the structure when finished, including all materials and labor. This is not the current value at the start of construction; it’s the full projected cost at completion. Setting the limit at the completed value ensures that the policy is adequate even if a total loss occurs toward the end of the project, when most of the value has been incorporated into the structure. Undervaluing the project at the time of placement can result in insufficient coverage at claim time.
What happens if my project runs over schedule?
Builders risk policies are written for a specific project duration — typically 6, 12, or 18 months depending on the project. If construction extends beyond the original policy period, the policy must be extended before it expires. A lapse in builders risk coverage mid-project leaves the structure uninsured until a new or extended policy is in place — and any loss that occurs during a lapse is not covered. We proactively manage policy extensions for clients with active projects and flag upcoming expirations before they become a problem.
Does builders risk cover flood damage in Texas?
Standard builders risk policies exclude flood — the same as most property insurance. Flood coverage for a construction project requires a separate flood insurance policy, typically through the National Flood Insurance Program or a private flood carrier. In Texas, flooding is a consistent risk that affects properties outside designated flood zones, particularly during severe weather. If a project is in or near an area with any flood exposure, we discuss flood coverage as part of the overall project insurance program.
What coverage does a pool builder need during construction?
Pool builders have a unique exposure during construction — the pool shell, plumbing, electrical, and equipment are all installed before the homeowner’s policy covers any of it. Builders risk for pool projects covers the in-progress pool against storm damage, vandalism, and other covered losses before completion. This is paired with the pool builder’s GL (for third-party liability during construction), workers’ comp (for employee injuries), commercial auto (for vehicles and trailers), and inland marine (for tools and equipment on site). We build complete programs for pool contractors that address each of these exposures.

Get Started

Let’s get your project covered before the first day of work.

Call us or request a quote. We’ll get builders risk in place quickly, structure the policy for your project, and make sure every party with a financial interest is properly protected.

McKnight Insurance Services  ·  Mansfield, TX  ·  Same-day certificates  ·  Weekdays 8:30am–5pm