Builder's Risk Insurance: Who Buys It and What It Actually Covers

Builder's risk insurance covers a building during construction or renovation, along with materials and fixtures on site, but it's a project-length policy tied to the construction timeline, not an annual policy, and who's actually responsible for buying it depends entirely on the contract, not a fixed rule.

Who's actually responsible for buying builder's risk insurance?

It varies by contract, not a universal rule. Standard industry contract language (AIA A201-2017) defaults to the owner buying the policy unless the contract specifically says otherwise. In practice, private jobs often follow that default with the owner buying and naming the GC, larger and public projects more often have the GC buy it instead, and lenders frequently require the property owner to carry it on financed projects. Confirm this in the actual contract, never assume based on project type alone.

Who should actually be named on the policy?

Every party with a real financial stake in the project: the owner, the general contractor, subcontractors, the lender, and sometimes the architect. An owner-only policy can leave the GC and subs with no claim rights at all if something goes wrong, naming only one party is a real, common gap.

Does builder's risk cover stolen tools on the job site?

This is one of the most commonly confused points, and the distinction matters. Builder's risk typically covers theft of materials and fixtures stored on site that are destined to become part of the building. It generally does not cover a contractor's own tools and equipment, that's a separate coverage, usually inland marine or contractor's equipment coverage, not builder's risk.

What's on the job site	Covered by builder's risk?
Materials/fixtures destined for the building	Yes, typically, including theft
Contractor's own tools and equipment	No, needs inland marine/equipment coverage instead
The structure itself, mid-construction	Yes
Materials stolen by an employee	Often excluded, confirm on the specific policy

What's a real gap worth knowing about before a claim happens?

Employee theft of materials is commonly excluded from standard builder's risk coverage, a detail that catches people off guard specifically because it feels like it should fall under the same "theft" coverage that protects against an outside party stealing materials. It doesn't automatically, and it's worth confirming directly rather than assuming.

How long does builder's risk coverage actually last?

It's tied to the project's construction timeline, not a standard annual term, coverage starts when the project begins and ends at project completion or occupancy, whichever the policy specifies, not on a renewal date like most other commercial coverage.

Confirm who's buying this coverage and who's named on it before a project starts, not after something goes wrong. Explore commercial coverage options or start a free quote in minutes.