Builders Risk Insurance for Construction Projects

The contract between the project owner and the general contractor typically specifies which party is responsible for procuring builders risk coverage. On most commercial projects, the owner purchases the policy and names the general contractor and subcontractors as additional insureds. On many residential and smaller commercial projects, the general contractor procures coverage. ALKEME reviews your contracts to ensure the responsible party is clearly identified and that the policy terms satisfy all contractual requirements.

Most builders risk policies cover theft of building materials and supplies that will become a permanent part of the structure. However, contractors tools and construction equipment such as excavators and generators are typically excluded and require a separate inland marine or equipment floater policy. ALKEME coordinates builders risk and inland marine placements together to ensure there are no gaps between what each policy covers.

Builders risk coverage terminates when the project reaches substantial completion, when the owner accepts the building, or when the building is occupied, whichever occurs first. Any delay beyond the original policy period requires an extension endorsement. ALKEME tracks project timelines and initiates extension requests well before the policy expiration date to prevent lapses in coverage during the critical final stages of construction.

The coverage amount should equal the completed value of the project, including all hard construction costs, materials, and labor. Soft costs such as architectural fees, permit costs, and financing charges should be included if soft cost coverage is elected. ALKEME works with clients and their project cost estimators to establish accurate coverage limits that reflect the true completed value, preventing coinsurance penalties that can reduce claim payments when the insured value is understated.