Builder’s risk insurance is a special type of property insurance which indemnifies against damage to buildings while they are under construction. Builder’s risk insurance is coverage that protects a person’s or organization’s insurable interest in materials, fixtures and /or equipment being used in the construction or renovation of a building or structure should those items sustain physical loss or damage from a covered cause.

Buildings are subject to many different risks while under construction. They may catch fire, be damaged by high winds.  A principle of common law is that any new construction or other improvement to land becomes property of the owner of the land- the title holder -once there has been an improvement to the owner’s site. Builder’s risk insurance indemnifies against some of those losses.

Builder’s risk covers perils such as fires, wind, theft and vandalism and many more.These policies also do not cover accidents and injuries at the workplace, and is intended to terminate when the work has been completed and when the house is ready for occupancy. 

Coverage is often purchased by the custom builder or general contractor and may also be purchased by the property owner. Builder’s risk coverage may be necessary to show proof of insurance to comply with local city,country, and state building codes and is often required as a condition to many contracts.

If the project involves renovations or additions to an existing building, the owner’s existing property insurance may cover the work under construction, eliminating the need for builder’s risk insurance. However, in the case of new buildings under construction on vacant sites, the owner may not have an existing policy that provides coverage