Protect The Project: A Guide To Builders Risk Insurance For Small Contractors

Whether you're constructing a new home, remodeling a building, or managing a renovation, there's always risk involved in construction. Fires, theft, vandalism, and severe weather can derail a project overnight—leading to costly delays and out-of-pocket expenses. That’s where Builders Risk Insurance becomes essential, especially for small contractors who may not have the financial cushion to absorb such losses.
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Builders risk insurance acts as a temporary, project-specific shield, designed to protect the materials, labor, and equipment used during the course of construction. Here’s what small contractors need to know to ensure their projects—and profits—are protected.

What Is Builders Risk Insurance?
Builders Risk Insurance (also called Course of Construction Insurance) is a specialized form of property coverage that protects buildings and structures under construction or renovation. It typically provides protection against damage caused by:

• Fire
• Theft or vandalism
• Lightning
• Wind or hail (depending on location)
• Explosions
• Certain water damage events

Note: Earthquake and flood coverage may need to be added separately depending on your region.


Who Needs Builders Risk Insurance?
This policy is essential for:

• General contractors
• Subcontractors
• Developers
• Home builders
• Property owners managing their own construction

Even small or independent contractors working on custom homes, home additions, or light commercial construction benefit greatly from this coverage.


What Does Builders Risk Insurance Cover?
A builders risk policy typically includes:

1. Structures Under Construction
   The building or renovation project itself, from ground-up construction to partial remodels.
   
   
2. Materials and Supplies
   Items on-site, in storage, or in transit to the project site.
   
   
3. Temporary Structures
   Scaffolding, fencing, and construction trailers.
   
   
4. Labor Costs
   Some policies may include reimbursement for labor if materials are damaged and need to be reinstalled.
   
   
5. Soft Costs (Optional Add-On)
   Financing fees, permits, legal expenses, lost sales or rental income due to delays.

What’s Not Covered?
Builders risk insurance does not typically cover:

• Employee injuries (requires Workers’ Compensation)
• Liability claims (requires General Liability Insurance)
• Faulty workmanship or design errors
• Wear and tear or poor maintenance
• Tools and equipment (may require Inland Marine Insurance)

How Much Does It Cost?
Builders risk insurance costs are usually 1–5% of the total construction budget. The final premium depends on:

• Project value and location
• Type of construction
• Project duration
• Coverage limits and deductibles
• Optional add-ons like flood or earthquake coverage

Tips for Small Contractors When Buying Builders Risk Insurance

1. Start Early
   Secure coverage before construction begins; policies often don’t backdate.
   
   
2. Choose the Right Policy Duration
   Policies are typically issued for 3, 6, 9, or 12 months, with extensions available.
   
   
3. Know Your Responsibilities
   Many insurers require contractors to take reasonable precautions (e.g., fencing, on-site security) to reduce risk.
   
   
4. Bundle Smartly
   Combine with general liability and contractor's equipment coverage for comprehensive protection.
   
   
5. Work With a Broker
   An experienced insurance agent can help tailor the policy to your specific project needs and budget.

Final Thoughts
As a small contractor, every project represents not just a contract—but your reputation and livelihood. Builders risk insurance is an investment in project security, helping you weather unexpected events and deliver your work on time and within budget.

Don’t leave your project exposed.

• Review your upcoming jobs.
• Consult an insurance expert.
• Get builders risk coverage that’s right for your scale and scope.

Because when it comes to protecting your work, the best foundation is the right coverage.

At Elite Insurance Services, we put our clients first by offering them policies that they can afford. Having insurance is a necessity nowadays, and we're here to help you. Learn more about our products and services by calling our agency at (719) 302-1110. You can also request a free quote by CLICKING HERE. 

Disclaimer: The information presented in this blog is intended for informational purposes only and should not be considered as professional advice. It is crucial to consult with a qualified insurance agent or professional for personalized advice tailored to your specific circumstances. They can provide expert guidance and help you make informed decisions regarding your insurance needs.