Builders Risk Insurance

Dwelling under construction insurance

Insuring a home while it's under construction presents can raise red flags for insurance companies. A house poses significant risks while it's being built via vandalism, theft, damage to building materials, or onsite equipment.

To account for this additional risk, insurance companies require the purchase of a dwelling under construction endorsement. Also known as builders risk insurance, this coverage add-on ensures your home stays insured while it's in the process of being constructed. Let’s outline the ins and outs of dwelling under construction coverage and where you can buy it.

1. Is builders risk insurance required?
2. What does builders risk insurance cover?
3. Where to buy builders risk insurance

When to buy builders risk insurance

If you have a major financial stake in a renovation or new home construction project, consider builders risk insurance. A typical homeowner’s policy may exclude from coverage damages to a home that is under renovation or construction.

If you’re not sure whether your project requires additional dwelling under construction coverage, speak to an insurance agent at your company.

As a general guideline, you may need builders risk insurance if:

• Your home is being built
• Your home is undergoing major changes, requiring expensive tools and labor 

What does builders risk insurance cover?

Builders risk coverage, also known as course of construction insurance and dwelling under construction insurance, varies considerably by insurance company and by the project.

Generally, it covers damage sustained by: 

• The dwelling's physical structure
• Materials 
• Supplies 
• Equipment onsite while your home is under construction

What is not covered by builders risk coverage?

Builders risk insurance offers less coverage than a typical homeowners policy. With dwelling under construction coverage, you receive no liability insurance coverage, personal property coverage, living expenses coverage, or medical payments to others insurance. This coverage is supposed to be temporary. Once the construction project is finished, you should update your coverage to a standard home insurance policy.  

Tip:  Read up on attractive nuisances in Construction Zones and vacant home insurance.

How to get builders risk insurance

The availability of dwelling under construction insurance varies by the insurance company and by the project in question. If you’re in the market for course of construction coverage, speak with an insurance agent. A licensed insurance agent can walk you through the complex, situation-specific details.

Below are insurance companies offering dwelling under construction insurance.

• State Farm
• The Hartford
• Texas General Insurance