A lot of risks lurk around construction projects . A building under construction lacks proper security and can be a target for theft and vandalism. Negligent electrical wiring can trigger a fire; not to mention losses due to natural disasters. All these are hazardous to a construction project and may stall any progress made. It's why building contractors must purchase builders risk insurance as it's the core of any effective risk management program for construction.
Commercial property insurance is underwritten in a way that it only provides coverage to a commercial building that’s already finished and is currently being used. Carriers never insure ongoing projects through commercial property insurance. Instead, protection is provided with builders' risk insurance.
Also known as course of construction insurance, a builders risk policy is specialized insurance for protecting building structures under construction, remodeling, or renovation.
The insurance policy is complex and often misunderstood, but it plays a key role in ensuring a risk-free building project. Understand that builders risk insurance comes in three forms: location-specific, reporting form, and blanket form.
As the name implies, location-specific builders risk insurance only covers a particular project in a location. For example, if you insured a project in Colorado with location-specific builders risk insurance, then that project will be the only one covered. Other projects, if there are any, aren’t protected. Location-specific builders risk insurance works for contractors that only take one project at a time.
Contractors who receive multiple projects are best covered with reporting form or blanket form builders risk insurance. Reporting form or blanket form builders risk insurance cover multiple projects in different locations. Some carriers even allow both to have international coverage, so that what’s covered aren’t only domestic projects but overseas projects too.
One more thing, builders risk insurance has two types - commercial and residential. Commercial builders risk insurance is for renovation, construction, and remodeling projects involving offices, stores, gyms, sports arenas, and the like. On the other hand, residential builders risk is for projects involving bunkhouses, personal garages, family homes, and so on.
Builders risk insurance is usually purchased by contractors. But note that this is also available for other professions that provide remodeling, construction, and renovation services such as:
Real estate developers
House flippers
Roofers
Interior designers
Builders
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A basic builders risk policy covers hazards to the building under construction, and equipment, machinery, materials, and supplies. Unlike popular opinion, course of construction policies don't cover on-the-job injuries or accidents. A policyholder of a builders risk insurance can file a claim when damage to the project is incurred because of:
Fire
Vandalism
Equipment theft
Vandalism
How about damage resulting from poor workmanship or design? A basic builder's risk doesn’t cover damage resulting from human error, mechanical breakdown, normal wear and tear, rust, and corrosion. To cover these, you need to endorse additional policies.
Some of the commonly covered project components include:
Foundation
Fixtures
Building machinery and equipment
Other structures/facilities part of the construction project
Nonetheless, most insurance carriers will not include landscaping , construction trailers , ground transport rigs, scaffolding, satellites and antennas, and theft of supplies and tools. But if any of these components is of value to you, it's possible to include it in your construction risk insurance at increased premiums.
Builders risk insurance companies won’t think twice about insuring a project worth millions of dollars. However, there’s a threshold on how much carriers are willing to cover. For instance, if the project is worth billions, then small-time carriers won’t provide coverage.
Only big insurance companies are willing to provide builders risk insurance to contractors who have billion-dollar projects. An example is Zurich. Zurich offers $1 billion builders risk insurance for customers in good standing.
The amount of money you can get from builders risk insurance is equal to the total estimated value of the project. For example, if your project is $1 million, then builders risk insurance can cover you for the same amount. No builders risk insurance offer custom limits, meaning that you can’t decide how much to get on your own.
Builders risk insurance is not a requirement. However, note that some projects might require you to get builders risk insurance to satisfy the terms.
If you’re the project owner and the contractor doesn’t have coverage, then consider getting builders risk insurance for yourself.
The bottom line is having builders risk insurance is better than not having it. Choose to have this policy even if it seems like you don’t need it right now.
Aside from builders risk insurance, you might also need to purchase other policies such as:
Public liability insurance - This policy helps cover costs if an accident occurred and third-parties got injured or had their property damaged
Professional liability insurance - Particularly useful if you’re accused of failing to meet deadlines. Also, covers cost if the client accuses you of committing negligence and violation of good faith
Workers compensation insurance - Allows you to pay an injured worker's medical bills. Also provides an allowance up until the injured worker is strong enough to go back to work or until a certain threshold is reached
Employer’s liability insurance - Helps pay for costs if a workers blames you for a work-related injury, delayed employee benefits, and more
The average cost of builders risk insurance is 1% to 5% of the total construction budget. For instance, if your building project costs a total of $100,000, expect to pay anywhere from $100 or $1,500 a month. If paid annually, then the cost is $1,200 or $18,000.
Several factors may affect your builders risk insurance quote. They include:
Project's budget - This is a factor that significantly affects the cost of premiums since pricing is based on the percentage of the project’s total value. A builders risk insurance for a $1 million project is more expensive than that of a $500,000 project
Location of the job site - Where is the job site located? Is it near the coast? A place where strong winds usually set in? No matter which is which, note that builders risk insurance for projects in high risk locations is expensive
Project timeline - How long will the project be? One year, two years, three years, or longer? Note that builders risk insurance is much cheaper for projects that are quick to complete
To give more insights, here’s a table showing the builders risk insurance price of the top-rated companies:
| | Monthly Rates | Annual Rates | Best for |
|---|---|---|---|
| CoverWallet | $150 | $1,800 | Builders risk insurance quotes comparison online |
| Zurich | $163 | $1,956 | Builders risk insurance for mid-sized construction companies |
| Progressive | $223 | $2,676 | Builders risk insurance for multiple projects |
| State Farm | $240 | $2,880 | Builders risk insurance with flexible policies |
| AIG | $267 | $3,204 | Builders risk insurance with extensive coverage |
| US Assure | $276 | $3,312 | Builders risk insurance that's easy to claim |
| Geico | $280 | $3,360 | Builders risk insurance for residential construction projects |
| USAA | $285 | $3,420 | Builders risk insurance in the form of rental policy |
| Allstate | $290 | $3,480 | Builders risk insurance with a lot of local agent support available |
| The Hartford | $300 | $3,600 | Builders risk insurance with interruption coverage |
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Purchasing home insurance or builders risk insurance can be challenging and confusing. There are many insurance carriers and identifying the right partner for your needs might be a hassle. If you're trying to find the best companies, here are the best construction risk insurance providers:
Free and fast builders risk COI
Get the cheapest builders risk insurance quotes from different companies and compare
Not an insurance company but a broker selling the policies of its partners
CoverWallet sells the builders risk insurance of its partners. Even if the company doesn’t underwrite its builders risk insurance, everything’s great because easy online policy management and free online certificate of insurance are provided. With its online quote comparison platform, CoverWallet helps the customer get the best coverage at the cheapest rates.
Best for: Builders risk insurance quotes comparison online
Average cost: $150
Our rating: 10/10
Clients can rate, quote, and manage policies online
Available nationwide in 50+ states
Direct contact to a dedicated team of experienced underwriters
Policies can be insured under the property owner's or contractor's name
There are a lot of coverage details on the company's website, which can be overwhelming
Zurich offers tailored commercial builders policies for mid-sized and large construction totaling up to $75 million in value. With over 25 years in the construction insurance sector, the company boasts a team of professional underwriters, including risk engineering and claims specialists seasoned in the construction sector. Zurich commercial builders risk insurance covers the building structure under progress, onsite materials, equipment.
Best for: Builders risk insurance for mid-sized construction companies
Average cost: $163 per month
Our rating: 10/10
Customizable quotes are available online
Clients can add work-related accidents to their commercial construction insurance
Covers wide-ranging construction projects
Policy purchases are only possible through an agent
Progressive commercial is an acclaimed insurer providing a range of policies at affordable rates and unparalleled customer service. Among its insurance products is construction insurance, which protects your commercial building project from unexpected situations and work-related accidents. The company's construction insurance covers several projects, including, home improvement, remodeling, excavation, asphalt laying, concrete laying, roofing, etc. Clients can obtain quotes online with customization opportunities.
Best for: Builders risk insurance for multiple projects
Average cost: $223 per month
Our rating: 10/10
Strong financial rating
Ranks second among the top builders risk insurance providers for customer satisfaction
Limited details about its policies unless you speak to an agent
Established in 1922, State Farm is one of the largest risk coverage providers in the US. It has financial stability, coverage options, and a positive track record among customers. State Farm commercial builders insurance includes equipment failure coverage, building protection, and municipal law protection. Additionally, the insurance carrier ranks among the top carriers with flexible policies, and you can customize each of the policies with support from an agent.
Best for: Builders risk insurance with flexible policies
Average cost: $240 per month
Our rating: 9/10
An in-house team of claims adjusters dedicated to risk coverage
Fifty percent payment assurance within 7 days of an approved claim
Has a risk management team that helps clients mitigate losses and minimize insurance costs
Clients can only get a builders hazard insurance quote or buy AIG coverage from a broker
AIG is one of the leading providers of construction risk insurance because they are experts and experienced in the construction industry. The company has an excellent reputation among contractors and property managers, thanks to its agents who collaborate with clients to provide personalized policies to meet a project's specific needs. Hence, AIG is a great insurer if you're managing midsize or large construction works requiring extensive coverage.
Best for: Builders risk insurance with extensive coverage
Average cost: $267 per month
Our rating: 8/10
A policy can be insured in the property owner's or contractor's name
Property insurance products comprise equipment, rentals, and vacant buildings
It's easy to file a risk insurance claim. Clients only need to contact the agency where they purchased the coverage
Insurance programs only offered by Zurich
US Assure established its builders risk coverage program in 1977, helping clients achieve success by discovering opportunities and revenue growth. Apart from risk protection, it also provides construction and property insurance. With US Assure, you can get builder risk insurance for projects of any scale and valuation, from new ground-up projects to renovation works and small-scale installation projects. US Assure is the company behind Zurich's on course construction policies.
Best for: Builders risk insurance that's easy to claim
Average cost: $276 per month
Our rating: 7/10
Customers can include optional coverage with the help of Geico qualified insurance agents
Has a dedicated division exclusively handling construction risk coverages
Products focus majorly on homeowners
Geico specializes in property insurance, including homeowners insurance, renters insurance, landlord insurance, flood and earthquake coverage policies, etc. However, if you want to buy construction risk insurance, you can discuss your special needs with an agent in the company's Commercial Insurance division. Geico construction risk insurance policies cover residential construction projects and damages caused by fire, earthquakes, contractor's negligence, etc.
Best for: Builders risk insurance for residential construction projects
Average cost: $280 per month
Our rating: 7/10
Highly rated for customer service
Offers digital claims tools through an app
Include replacement costs
A client must be a member or veteran of the US military or a relative of one
No local agents or brokers
USAA was established in 1922 in San Antonio, by 25 military servicemen. The company offers many insurance and financial products, including home insurance, to armed forces personnel and veterans and their families. With over 36,000 employees, 13 million members, and satellite offices across the US, USAA provides commercial builder insurance in the form of a rental policy. That covers any construction risks of a new residential property.
Best for: Builders risk insurance in the form of rental policy
Average cost: $285 per month
Our rating: 6/10
Local insurance agents available
Optional online identity tracking software
More expensive policies than competitors
Allstate also specializes in offering cheap home insurance quotes to residential property owners, although the company provides builders risk policies for a limited timeframe, after which clients can switch to a homeowners policy once the construction is complete. If you're living in a rental home and purchase renters insurance, the policy will include liability coverage for your new construction project, so long as you purchase the company's homeowner's insurance.
Best for: Builders risk insurance with a lot of local agent support available
Average cost: $290 per month
Our rating: 6/10
Wide range of policy extensions (such as daily-in-completion and soft expenses)
Clients can use their policy to cover all their construction risk needs
Flexible deductible with cost-saving opportunities
Clients can get quotes online
Relatively costlier than other carriers
Policies only sold by agents
Had a lower-than-average score on a customer satisfaction rating in a 2021 US small commercial insurance study by JD Power
Builders risk coverage is not available in New Jersey, Hawaii, or Alaska
The Hartford is one of the most authoritative construction industry insurers. It was founded in 1810 and has a strong financial power recognized by carrier review agencies, such as AM Best, S&P, and Moody's. The company offers a wide range of builder risk policies at affordable prices. The Hartford property owner's policies include interruption coverage that covers costs if something halted your project. Besides, you can also include a workers' compensation program, management liability, installation policies, etc. While you can obtain a quote online, only an agent can sell you a policy.
Best for: Builders risk insurance with interruption coverage
Average cost: $300 per month
Our rating: 6/10
Are you a property owner or general contractor purchasing builders risk insurance? Use our online quotes platform where you can compare the offers of various carriers. Click the "Get Quotes " button to start.
1 / 5
Use anyone except Employers. Period. They are non-transparent and shameful. After I complained long enough to warrant a call from a supervisor, the supervisor called back from a PRIVATE NUMBER (no caller ID), left a message that they are not reversing their decision (without any communication with me), and failed to leave a phone number for me to call back. She was hiding! They also fact find via email and phone calls, which is terrific for speed and communication. However, after setting a precedence of email or phone calls, they send time sensitive information via email, without any heads up... they are hoping you miss it and forfeit via expiration. Evil policies. Go elsewhere.
1 / 5
This place is an absolute joke of a company and should be ashamed of the way they conduct business. I was hurt on the job at the end of July and it took them just shy of 7 weeks to issue out a paycheck to me. Yes the amount was back dated but still. Not many have the luxury of not receiving a paycheck for almost 2 months. To top it all off, the original adjuster marked me down for the wrong state which caused a problem from the get go, I've had 3 different adjusters now since each one can't seem to figure out the simplicity of my claim. All my paperwork which includes, my job, house, and drs visits all are from the same state and city but yet some how I have been filed under a completely different state 1500 miles away. They do not answer your phone calls or emails no matter how many you leave. I've had to escalate my frustrations to the supervisors of each of these individuals in order to even get some kind of response. I've had more communication and information given to me about my claim from the customer service representatives then the actual adjusters.......... please tell me how that works?! A serious overhaul needs to happen here in order to serve your clients the way they deserve to be taken care of. 10/10 do not recommend this company to a single soul on earth
1 / 5
I have never had the displeasure of working with a more incompetent and disrespectful person in my life. I’m an injured worker and the adjuster that was assigned to my case was named Carrie Furgeson. In the past 6 weeks that I’ve been injured and out of work I have only been able to get ahold of her twice, not for lack of trying. I have left countless voicemails, countless emails, and she ignores them all. When I am finally able to get ahold of her I’m greeted with terrible customer service. She is rude, she talks over me and I’m hardly able to get a word in edgewise. She spelled my name wrong on my documents even after I spelled it for her properly countless times, this caused a whole new issue with my bank. I have bill collectors from the hospital calling me demanding payment and Carrie Furgeson won’t do a single thing to help, or to get them paid. All of my documentation is in Colorado, my job is in Colorado, my address is in Colorado, all my Dr offices and appointments have been in Colorado and Carrie still managed to hold my claim because she wasn’t sure what state she needed to file it under. It’s been 6 weeks since my Injury and my company still hasn’t received the wage paperwork to fill out so they can get me my correct wages. When she’s not ignoring me she’s answering my questions with “I don’t know” well I don’t know how she got this job, because apparently she doesn’t know anything about it. She is a disgusting morose individual inside and out and I genuinely wish her the worst in all of her future endeavors. I highly recommend you don’t use this company. Please if you are a business owner and your looking into this company please don’t use them. I’m sure they have the cheapest payment and that’s why companies use them in the first place, but you will be doing your employees a grave disservice by forcing them to venture into this absolute dumpster fire of a company. I would rate 0/5 if possible but 1 was the lowest I was allowed.
5 / 5
Their general liability insurance purchase process is simply the best online experience I've ever had in my life!
5 / 5
As long as they cover your line of business, you're literally covered! best rates, best coverage, best online experience, best professionals, can't be happier that I chose them!
Not all those who wander are lost.
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