Many construction projects need both builders risk insurance and general liability coverage. These policies cover different types of risks. Knowing how they work helps avoid gaps in protection. This guide explains what each covers, how they differ, and when you need them.
What Is Builders’ Risk Insurance?
Builders risk insurance is a policy that covers buildings during construction. It protects the structure, materials, and equipment on site. It’s temporary coverage for property at risk during a build. It applies to new construction, remodeling, and installations.
Once the project ends, this coverage usually expires or transitions to a permanent property policy.
What Does Builders’ Risk Insurance Cover?
Builders’ risk insurance covers property that could be damaged or lost during construction. This includes the building under construction, on-site materials, fixtures, and some equipment. Coverage depends on the terms of your policy.
Common risks may include:
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Fire
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Theft
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Vandalism
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Lightning
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Wind and hail
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Explosion
Coverage can be extended for things like debris removal or temporary structures. It does not cover accidents, worker injuries, or faulty workmanship. That’s where other policies, like general liability or workers’ compensation, come in.
What Is General Liability Insurance?
General liability insurance covers third-party claims for bodily injury, property damage, or personal injury. It protects against lawsuits if someone gets hurt on-site or if work accidentally damages another’s property.
This coverage applies to contractors, subcontractors, and business owners.
Builders Risk vs. General Liability: Key Differences
Builders risk insurance and general liability cover different risks in construction. Here’s a simplified breakdown:
Builders risk covers:
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The building under construction
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On-site materials and equipment
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Risks like fire, theft, and vandalism
General liability covers:
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Injuries to visitors or third parties
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Damage caused to someone else’s property
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Legal fees if someone sues
Builders risk is:
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Temporary (until the project ends)
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Usually needed for new builds or renovations
General liability is:
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Ongoing
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Required on most job sites
Who Pays for Builders Risk Insurance?
Who pays for builders’ risk insurance depends on the project contract. In some cases, the property owner pays. In others, the contractor or builder is responsible.
For large builds, owners often include the cost in the project budget. For smaller jobs, contractors might add it to their pricing. Sometimes both parties share the cost.
It’s important to check the contract terms. The policyholder usually controls the coverage and handles claims. Agreeing on who pays, and who holds the policy, helps avoid disputes later.
How Much Is Builders’ Risk Insurance?
How much is builders risk insurance costs depend on the project’s value, location, type, and timeline. Other factors that affect pricing:
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Project duration
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Type of materials used
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Theft risk in the area
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Coverage limits and extensions
Shorter, low-risk projects cost less. High-value or long-term builds cost more. Getting quotes from multiple providers helps you find the best rate.
When Do You Need Both Policies?
Most construction projects benefit from having both builders risk insurance and general liability. Each covers different risks.
You need both when:
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You’re building from the ground up
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The project includes major renovations
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You’re working with subcontractors
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You’re responsible for site safety and materials
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The contract or lender requires full coverage
Builders risk covers property damage. General liability covers injury or damage to others. One doesn’t replace the other.
Do you need builders risk insurance for renovations? If your project involves structural changes or expensive materials, the answer may be yes. Having both helps protect your project, your business, and your reputation, especially when things go wrong.
Reach Out to Learn More
Connect with our local insurance agents to most suitable insurance policies for your needs. Learn more about builders risk insurance here.
This post is for informational purposes. The details and conditions of insurance policies vary. We always recommend speaking with an agent to understand the terms of your existing policies and the policies you plan to purchase.
To consult with an insurance advisor, call 800-392-6532 or email .
