What is Builder’s Risk Insurance, and When Do I Need It?

Imagine you’re midway through a major construction project. You’ve invested time, money, and effort to ensure every detail is perfect. Then, out of nowhere, a storm sweeps through, causing significant damage to the structure. In an instant, your hard work faces costly setbacks. This is where builder’s risk insurance steps in—a safeguard for your construction projects against unforeseen damages. But what exactly is it, and why is it crucial for contractors and subcontractors?

What is Builder’s Risk Insurance, and When Do I Need It? Hertvik Insurance Group Medina OH

Understanding Builder’s Risk Insurance

Builder’s risk insurance, also known as course of construction insurance, is a specialized type of property insurance designed to cover buildings under construction. It provides coverage for damages to the property itself and materials on site, in transit, or at temporary storage locations. This insurance is typically purchased by the property owner, general contractor, or subcontractor involved in the project. It serves as a safety net, ensuring that the financial impact of unexpected incidents doesn’t derail your project.

Example: Imagine you’re constructing a new office building. Midway through, a fire breaks out, destroying a significant portion of the structure and the materials stored on-site. Without this coverage, you would face substantial financial losses. However, with this insurance, the cost of repairing the damages and replacing the materials would be covered, allowing you to continue the project with minimal financial strain.

What is Builder’s Risk Insurance, and When Do I Need It? Hertvik Insurance Group Medina OH

Coverage Scope: What’s Included?

Builder’s risk insurance typically covers a wide range of potential risks. These include fire, theft, vandalism, lightning, wind, hail, and other unexpected events that can damage the property under construction. It’s essential to understand that coverage can vary, and specific exclusions might apply, such as earthquakes or floods, which may require additional policies.

Example: Consider a scenario where you’re working on a residential development project. One night, heavy winds cause a partially constructed roof to collapse. The resulting damage is extensive, requiring immediate repairs to avoid further delays. With builder’s risk insurance, the costs of these repairs are covered, ensuring your project stays on track without incurring unexpected expenses.

When Do You Need Builder’s Risk Insurance? Hertvik Insurance Group Medina OH

When Do You Need Builder’s Risk Insurance?

Determining when you need builder’s risk depends on the nature and scope of your construction projects. Generally, it’s advisable to obtain this insurance before starting any significant construction or renovation project. Whether you’re a general contractor overseeing large commercial developments or a subcontractor working on smaller residential projects, having builder’s risk insurance in place provides a crucial layer of protection.

Example: Suppose you’re a subcontractor hired to install electrical systems in a new commercial building. Mid-project, a severe hailstorm damages the building’s exterior and some of your installed components. Without builder’s risk insurance, you might be responsible for replacing the damaged materials and repairing the structure, leading to substantial out-of-pocket expenses. However, with the insurance, these costs are covered, allowing you to focus on completing your work without financial worries.


In the dynamic world of construction, risks are inevitable, but financial setbacks don’t have to be. Protect your projects and your bottom line with builder’s risk. At Hertvik Insurance Group, we understand the unique challenges contractors and subcontractors face. Our experts are here to guide you in choosing the right coverage tailored to your specific needs.

Don’t wait for an unforeseen incident to disrupt your hard work. Contact Hertvik Insurance Group today to learn more about how builder’s risk insurance can safeguard your investments and ensure your projects’ success.