New Construction
Residential, commercial, and mixed-use buildings being constructed from the ground up may require coverage for the full completed value of the project.
Course of construction coverage
Builders Risk Insurance in Virginia
A building under construction faces different property risks than a completed and occupied structure. Builders risk insurance helps protect qualifying project property while the work is underway.
Ford Agency can help Virginia contractors, property owners, and developers review coverage for new construction, remodeling, additions, and renovation projects.
Protect the project itself
General liability does not replace builders risk insurance.
Contractor general liability primarily addresses covered claims from third parties alleging bodily injury or property damage caused by the contractor’s operations. It is not designed to insure the full value of a building being constructed.
Builders risk, also called course of construction insurance, is a form of property coverage. It may insure the structure and qualifying materials, supplies, fixtures, and equipment that will become a permanent part of the completed project.
A fire, severe storm, theft, vandalism, or another covered event can damage months of work and materials. The correct builders risk policy helps establish how covered project property will be valued and which project interests are protected.
Arrange coverage early:
Builders risk insurance should generally be reviewed before work begins
or materials arrive at the jobsite.
Projects that may need coverage
Builders risk is not limited to ground-up commercial construction.
The policy structure should reflect the type of project, existing property, intended use, construction method, and parties involved.
Renovations
A renovation policy may need to address both the value of the improvements and the existing structure. Existing-building coverage should never be assumed.
Additions
Additions can create coverage questions involving the new work, the original building, structural connections, and responsibility for damage to existing property.
Major Remodeling
Substantial interior or structural remodeling may require more than an ordinary property policy, especially when a building is vacant or partially occupied.
Property Flips
Investors renovating a property for resale may need builders risk or renovation coverage based on the condition, occupancy, work scope, and projected completion date.
Installation Projects
Contractors responsible primarily for materials or equipment being installed may need an installation floater instead of, or in addition to, a project-wide builders risk policy.
Potential covered causes of loss
Coverage depends on the policy form and project.
Builders risk policies are not identical. Covered causes of loss, limitations, and exclusions should be reviewed before construction begins.
Fire & Smoke
A covered fire can damage the structure, installed materials, supplies, temporary work, and surrounding portions of the project.
Wind & Hail
Severe weather can damage exposed framing, roofing, materials, and partially completed work. Wind or named-storm deductibles may apply.
Theft & Vandalism
Coverage may be available for qualifying theft or vandalism, subject to policy wording, security requirements, exclusions, and limits.
Other Covered Events
Lightning, certain water damage, vehicle impact, and other causes may be covered depending on the selected policy form.
Setting the policy limit
Insure the project based on the completed value.
The builders risk limit is commonly based on the estimated completed value of the insured project, including covered labor, materials, and other qualifying construction costs.
The land value is generally not included. Depending on the policy and project, the calculation may also treat items such as professional fees, overhead, profit, existing structures, and owner-supplied materials differently.
Underestimating the project value can create a serious coverage problem. Changes in material prices, labor expenses, change orders, and project scope should be monitored during construction.
- Estimated completed construction value
- Labor and material costs
- Owner-supplied materials or equipment
- Value of existing property when applicable
- Temporary structures and site property
- Potential change orders and cost increases
Builders risk underwriting begins with a clear description of the construction project. The insurer needs to understand what is being built, who is performing the work, how much it will cost, and how long construction is expected to last.
Renovation projects require additional information about the existing structure, its current value and condition, occupancy during construction, and the scope of structural work.
Large, unusual, coastal, vacant, combustible, or delayed projects may require specialized underwriting. Providing complete information early gives us more time to approach the appropriate market.
Start a builders risk quoteWhat to send us
Information needed to review a builders risk project
- Project address and description
- New construction, renovation, or addition
- Estimated completed value
- Construction start and completion dates
- Square footage and number of stories
- Construction type and materials
- General contractor and owner information
- Protection, security, and site-control details
- Value of existing property when applicable
- Lender or contract insurance requirements
Coverage options to review
The base policy may not address every project expense.
Additional coverage may be available by endorsement or separate limit. Needs should be identified before a loss occurs.
Property in Transit
Materials traveling to the jobsite may require a transit extension or separate inland marine protection. Coverage territory, limits, conveyances, and causes of loss may vary.
Temporary Storage
Materials stored away from the construction site may need a specific off-site storage limit. The location and security arrangements can affect eligibility.
Soft Costs
A covered delay may create additional architectural, engineering, financing, permit, tax, advertising, or administrative expenses. Selected soft costs may be insurable.
Delay in Completion
Owners and developers may need protection for qualifying income loss or additional expenses caused by a covered delay. This coverage requires careful limit and waiting-period selection.
Debris Removal
Removing damaged construction materials following a covered loss can be expensive. Policy limits and additional allowances should be reviewed.
Ordinance or Law
Rebuilding after a loss may trigger updated building-code requirements. Coverage for increased construction costs may be limited unless specifically provided.
Common coverage concerns
Several exposures require closer review.
Existing Structures
Renovation coverage does not automatically insure the existing building. Its value and responsibility for insuring it must be addressed directly.
Flood & Earth Movement
Flood and earth movement may be excluded or limited. Separate protection or an endorsement may be necessary when available.
Water Intrusion
Water damage may be subject to exclusions, sublimits, protective measures, or distinctions involving weather, plumbing, and faulty workmanship.
Faulty Workmanship
Builders risk is not a workmanship guarantee. Policies may exclude the cost of correcting defective work while addressing certain resulting covered damage differently.
Who purchases the policy?
The construction contract should assign responsibility.
A property owner, developer, general contractor, lender, or another party may be responsible for arranging builders risk coverage. The construction contract should identify who purchases the policy, what property must be insured, and which parties must be included.
Owners, contractors, subcontractors, and lenders can have different financial interests in the project. Naming and loss-payable provisions should be coordinated with the contract and lender requirements.
Insurance professionals can explain available policy options, but contractors and owners should consult qualified legal counsel when interpreting or negotiating contractual obligations.
Do not assume another party purchased coverage.
Obtain written confirmation of the policy, effective dates, limits,
covered property, and named interests before work begins.
Builders risk coverage does not continue indefinitely. A policy may terminate when it expires, the owner accepts the project, the building becomes occupied, the insured’s interest ends, or another policy termination condition occurs.
Partial occupancy, phased completion, project delays, and changes in use should be discussed before they occur. A completed building normally needs permanent property insurance to replace the temporary construction coverage.
If construction will exceed the policy term, request an extension before expiration. Extensions are subject to underwriting and should not be assumed to be automatic.
Project completion
Know when builders risk coverage ends.
- Policy expiration
- Completion or owner acceptance
- Occupancy or use of the building
- Sale of the property
- Termination of the insured’s interest
- Another policy condition specified in the form
Coordinate the complete project
Builders risk is one piece of construction risk management.
Contractors may need several policies and bonds to satisfy the contract and protect their broader operations.
Frequently asked questions
Builders risk insurance
Every construction project is different. The policy should be matched to the property, work, contract, timeline, and parties involved.
Builders risk can cover the building under construction and qualifying materials, supplies, fixtures, and equipment intended to become part of the completed project. Coverage depends on the policy form, causes of loss, exclusions, limits, and endorsements.
The property owner, contractor, developer, or another party may be required to purchase it. The construction contract and lender requirements should identify who is responsible and which parties must be included.
General liability is not a substitute for builders risk. General liability primarily addresses covered third-party claims, while builders risk is designed to cover qualifying project property.
Theft may be covered depending on the policy, property involved, security measures, exclusions, and limits. Contractors’ tools and equipment may require separate inland marine coverage.
Not automatically. The existing structure must be discussed and properly valued. Some policies may cover it, while others insure only the renovation work and new materials.
Coverage should generally be arranged before work begins or materials arrive. Obtaining coverage after construction starts may require additional underwriting and cannot protect against a loss that has already occurred.
Coverage may end at expiration, completion, owner acceptance, occupancy, sale, termination of the insured’s interest, or another condition stated in the policy. Permanent property insurance should be coordinated before builders risk ends.
Protect the project from the beginning
Planning new construction or a substantial renovation?
Send us the project address, scope, value, construction details, and expected timeline. We will help you review the available builders risk options.