Builder's risk insurance, as the name implies, is used to cover the cost of certain unforeseen risks during the building process. While it is most often purchased by the general contractor of the project, depending on the construction contract or mortgage agreement, the building owner or homeowner may be required to purchase the builder's risk policy.

What Does Builder's Risk Insurance Cover?

Our trained insurance specialists will work to find the best solution for your needs, but the most common risks covered by a builder's risk policy include:

• Fire: A policy typically covers the cost of replacing or repairing materials or unfinished structures damaged by a fire.
• Weather damage: A standard policy covers the loss of materials due to non-severe weather events. Hurricanes and other severe weather events may require a separate endorsement.
• Vandalism: From graffiti to broken windows, the policy can reimburse damages done to the project.
• Theft: If construction materials are stolen, the policy can help pay for replacements.

What Is Not Covered in a Standard Builder's Risk Policy?

While it covers many risk factors, a traditional Texas builder's risk insurance policy won't cover everything. These losses require additional coverage beyond a standard builder's risk policy:

• Severe weather: Specific, additional insurance is needed to cover damage caused by floods, earthquakes, and other natural disasters.
• Tools and work vehicles: If your work trucks or tools are damaged, you'll need commercial auto and/or equipment floater insurance.
• Injuries: Workers' compensation or general liability insurance may cover the associated costs if there's an injury on the job site.
• Defective materials, workmanship, or design: Professional liability insurance may cover damage caused to an unfinished structure due to these issues.

What Does Builder's Risk Insurance Cost?

On average, the cost can run anywhere from 1-5% of the total project budget, but the honest answer is that it depends on several factors. Project location, materials used, and overall project cost can significantly alter any estimate. For example, the materials used in a luxury apartment complex will likely be more expensive and carry more potential risk than the materials needed for a metal outbuilding. Here at Hotchkiss Insurance, our qualified insurance specialists will work with you to find the builder's risk insurance policy that best suits both your needs and your budget.