Quick Answer
Builders risk insurance covers a home while it's under construction — a gap your standard homeowners policy does not fill.
Standard homeowners insurance is built for an occupied, finished residence and typically does not begin coverage until closing. A construction site has a completely different risk profile — exposed wiring, valuable materials staged on-site, and a vacant structure — which is exactly what builders risk insurance is designed to address.
Many construction lenders require proof of builders risk coverage before releasing loan funds, making it a near-mandatory part of financing a new build.
What's Covered (and What Isn't)
A typical builders risk policy covers the structure and materials, but excludes liability and worker injuries.
| Coverage Item | Typically Covered? | Notes |
|---|---|---|
| Structure under construction | Yes | The core purpose of the policy — covers the building itself while incomplete. |
| Materials & supplies on site | Yes | Lumber, fixtures, and other materials staged on the property before installation. |
| Materials in transit | Often (add-on) | Coverage for materials being delivered to the site, sometimes requires an endorsement. |
| Theft & vandalism | Yes | A primary reason builders risk exists — vacant job sites are common theft targets. |
| Fire & wind damage | Yes | Standard perils covered under most basic builders risk policies. |
| Flood & earthquake | No (add-on required) | Typically excluded from base coverage; available as a separate endorsement in applicable regions. |
| Liability for injuries on site | No | Builders risk covers property, not people — general liability insurance is a separate policy. |
| Worker injuries | No | Covered under your contractor's workers' compensation policy, not builders risk. |
Budget for Insurance From the Start
Include builders risk insurance in your total project budget
Insurance is an easy line item to overlook when budgeting a new build — don't let it catch you off guard.
Who Typically Purchases the Policy
Responsibility varies by project structure — confirm this in writing before construction starts.
Common when the homeowner has the most financial stake in the project, has no other structures to insure, or is acting as an owner-builder without a general contractor.
Common when a builder manages multiple projects and carries a blanket builders risk policy covering all active job sites under their management.
Many construction lenders require proof of builders risk coverage before releasing loan funds, regardless of who technically purchases the policy.
A per-project policy covers a single build from start to completion. An annual policy, often used by active builders, covers multiple projects within a policy year.
Confirm Who's Responsible Before You Sign Your Contractor Bid
Whether you or your contractor are responsible for builders risk insurance should be clearly stated in your construction contract — not assumed. If your contractor's policy is meant to cover the project, request documentation showing you as an additional insured, since coverage gaps between a contractor's policy and the homeowner's interests are a common and costly surprise.
Review your contractor's bid for insurance responsibility alongside the rest of the scope before signing.
Acting as your own contractor?
See how owner-builder insurance and liability responsibilities differ from hiring a GC.
Compare Owner-Builder vs GC →Owner-Builders Take On More Insurance Responsibility
If you act as your own general contractor, you typically take on the same liability a licensed contractor would otherwise carry — including the responsibility to secure builders risk coverage, general liability insurance, and ensure any subcontractors carry their own workers' compensation.
This added insurance and liability burden is an important factor to weigh alongside the potential cost savings of self-managing a build.
Recommended Tools and Reports
Contractor Bid Analyzer
Confirm insurance responsibility is clearly assigned in your contractor's bid.
Analyze Bid →Permit Report
Check whether your local jurisdiction requires proof of insurance for permits.
Check Permits →House Plans
Browse plans and start budgeting for your full project, insurance included.
Browse Plans →Frequently Asked Questions
Does my homeowners insurance cover a home under construction?
No. A standard homeowners insurance policy is designed for an occupied, completed residence and typically does not begin until closing. Most policies specifically exclude coverage for a dwelling under construction, which is why a separate builders risk policy is needed during the build itself.
Who is responsible for buying builders risk insurance — the homeowner or the contractor?
It depends on the project and contract terms. Typically, whoever has the most financial stake in the project purchases the policy — often the property owner if they own the land and have no other structures to insure, though many general contractors carry blanket policies covering their active job sites.
How much does builders risk insurance cost?
Cost varies by project value, location, construction type, and policy duration, typically calculated as a percentage of the total construction value. Get quotes specific to your project size and location, as national averages can be misleading given the wide variation by region and risk factors.
What does builders risk insurance not cover?
Standard builders risk policies typically exclude liability for injuries to people on the job site (covered separately by general liability insurance), worker injuries (covered by workers' compensation), and often flood or earthquake damage unless added as a separate endorsement.
Do I still need builders risk insurance if my contractor has their own policy?
Confirm the specifics before assuming you're covered. Some contractor policies list the homeowner as an additional insured, while others do not — and coverage gaps between a contractor's policy and the homeowner's interests are common. Always request documentation of exactly who and what is covered.
When does builders risk insurance coverage end?
Builders risk coverage typically lasts through substantial completion of the project, at which point a standard homeowners insurance policy should take over. Coordinate timing with your insurance agent so there is no gap between the two policies.
Before You Break Ground
Confirm Builders Risk Coverage Is in Place Before Construction Starts
Your standard homeowners policy doesn't cover construction — make sure the gap is filled.