General contractors builders risk insurance — also called course of construction (COC) insurance — covers the structure, on-site materials, and temporary works while a project is under active construction. It is typically required by the project owner's contract or the construction lender, and it follows the project, not the GC's annual policy. Who this is for: Commercial general contractors on new-build, renovation, or tenant improvement projects where physical damage to the project itself is a live exposure.
TL;DR — Key Takeaways
- Builders risk covers the physical project (structure + materials) against fire, theft, vandalism, wind, and most sudden-physical-loss perils during construction; it is not a substitute for the GC's general liability or inland marine policy.
- The policy limit should equal 100% of the completed hard-cost value of the project — underinsuring triggers a coinsurance penalty that reduces every claim payout proportionally.
- Premiums for commercial ground-up projects typically run 0.15%–0.50% of completed project value for standard wood-frame or masonry construction; fire-resistive steel-frame projects often price lower, while coastal or high-wind exposures can push rates above 0.75%.
- Coverage ends at substantial completion, occupancy, or the policy expiration date — whichever comes first — and that trigger must be managed actively.
- Soft costs (architect re-fees, loan interest, permit re-fees after a covered loss) are excluded from the base form and must be added by endorsement.
What Does Builders Risk Actually Cover for a GC?
Builders risk is written on a "special form" (all-risk) basis in most commercial markets, meaning every cause of loss is covered unless the policy specifically excludes it. For GCs the core covered perils include:
- Fire and lightning
- Windstorm and hail (may be sub-limited or excluded on coastal projects — see state-specific notes below)
- Theft of materials stored on-site or in transit (transit coverage usually has a sub-limit, often $100,000–$250,000)
- Vandalism and malicious mischief
- Collapse from specified causes (engineering error that causes immediate collapse is often covered; gradual settling is not)
- Water damage from accidental discharge (not flood — flood requires a separate NFIP or surplus-lines policy)
Standard exclusions GCs must know:
| Excluded Peril | Why It Matters for GCs | Common Fix |
|---|---|---|
| Earthquake | Major exposure in CA, OR, WA, NV, TN, SC | Separate quake endorsement or standalone |
| Flood / surface water | Any project in a floodplain | NFIP commercial or surplus-lines flood |
| Faulty workmanship / design error | Resulting damage from a defect IS often covered; the defective work itself is not | Professional liability / contractor's E&O |
| Contractor's tools & equipment | Scaffolding, forms, power tools | Inland marine / equipment floater |
| Employee theft | Differs from theft of materials by outsiders | Commercial crime policy |
| Wear and tear, rust, corrosion | Gradual deterioration | Maintenance practices |
| Soft costs (delay losses) | Architect re-fees, loan carry costs after a loss | Soft costs endorsement |
| Testing and commissioning damage | Equipment damaged during start-up | Separate machinery breakdown or testing endorsement |
Who Buys Builders Risk — Owner, GC, or Both?
This is the most frequent source of coverage gaps on commercial projects. Three structures are common:
- Owner-purchased policy — The project owner buys and controls the policy. The GC and all subcontractors are listed as named insureds or additional insureds. This is common on large commercial and institutional projects where the owner controls financing.
- GC-purchased policy — The GC is the first named insured and is responsible for placing coverage. Subcontractors are added as additional insureds. GCs doing spec builds, design-build, or ground leases almost always need to purchase their own policy.
- Dual / wrap-up arrangement — On large multi-trade projects, an Owner Controlled Insurance Program (OCIP) may wrap builders risk, GL, and workers comp into one program. GCs must review the OCIP documents carefully — coverage breadth and limits vary widely by sponsor.
Action step: Read the Owner-Contractor Agreement and its General Conditions (AIA A101/A201 or equivalent), Article 11, before assuming coverage exists. Missing or ambiguous language should be clarified before the first shovel breaks ground.
How Much Does Builders Risk Cost for a GC? (2025 Rate Ranges)
Builders risk is priced as a rate applied to the project's completed value (hard costs only, unless soft costs are added). The rate depends on construction type, occupancy, location, project duration, and loss history.
| Construction Type | Rate Range (% of Completed Value) | Example: $3M Project |
|---|---|---|
| Frame (wood) — standard region | 0.35%–0.60% | $10,500–$18,000 |
| Masonry / joisted masonry | 0.20%–0.45% | $6,000–$13,500 |
| Fire-resistive steel frame | 0.10%–0.30% | $3,000–$9,000 |
| Frame — coastal / high-wind zone | 0.65%–1.25%+ | $19,500–$37,500+ |
| Renovation / remodel (occupied building) | 0.40%–0.80% | $12,000–$24,000 |
Rates are illustrative ranges based on standard market conditions as of 2025 and do not constitute a quote. Individual project characteristics, GC loss history, and carrier appetite will affect actual pricing.
Additional cost drivers: - Soft costs endorsement: Typically adds 10%–15% to the hard-cost premium - Higher deductibles (e.g., $25,000 instead of $5,000) can reduce premiums meaningfully on large projects - Project duration: Most carriers charge the full annual rate for projects 12 months or under; longer projects may be prorated or re-rated at renewal
How to Set the Right Builders Risk Limit in 5 Steps
Underinsurance is the most preventable builders risk mistake. Here is the process:
- Establish the completed project value (hard costs only). Use the total contract value minus land, professional fees, financing costs, and permits — those are soft costs and require a separate endorsement limit.
- Add the value of owner-furnished materials. If the owner is supplying fixtures, equipment, or specialty items that will be incorporated into the structure, their value must be included in the limit even if they appear as a separate line in the budget.
- Account for escalation. On multi-year projects, material cost inflation can push the completed value above the original contract. Use a contractual escalation clause or set the limit at 110%–115% of the base hard cost to provide a buffer.
- Confirm the coinsurance clause (or "agreed value" / "reporting form"). Most builders risk policies require coverage of 100% of the project's completed value. Falling below that percentage reduces every claim payment by the underinsurance ratio (e.g., 80% covered = 80% of any loss paid, after deductible).
- Separate the soft costs limit. Work with your broker to set a soft costs sublimit that reflects realistic re-design, re-permit, and financing-carry costs for the project's expected recovery period (often 6–12 months of carrying costs).
State-Specific Notes for GCs
| State | Key Builders Risk Consideration |
|---|---|
| Florida | Wind/hurricane often excluded from base form; separate windstorm coverage required statewide for coastal counties. FLOIR regulates admitted carriers. |
| Texas | Wind and hail excluded in TWIA-eligible counties (Gulf Coast). Most GCs in TWIA territory need a separate TWIA policy or surplus-lines wind endorsement. |
| California | Earthquake is routinely excluded; a seismic endorsement or standalone policy is standard practice for Bay Area and Southern CA projects. |
| Louisiana | Storm surge and named-storm deductibles are common; verify sub-limits match lender requirements. |
| All other states | Standard admitted market generally available; confirm windstorm deductible language in high-hail regions (CO, KS, NE, OK). |
[Verify state] — State insurance department requirements and carrier form availability change; confirm current forms with your broker before binding.
Real-World Example: Wood-Frame Multifamily, $4.2M Completed Value
Project: A GC in suburban Nashville, Tennessee is building a 16-unit wood-frame apartment building. The owner-contractor agreement requires the GC to procure builders risk. Completed hard-cost value: $4,200,000. Estimated project duration: 14 months. No coastal wind exposure, but the site is 500 feet from a creek (Zone AE per FEMA map).
Coverage placed: - Builders risk limit: $4,200,000 (100% completed value, replacement cost basis) - Deductible: $10,000 per occurrence - Transit sub-limit: $150,000 - Soft costs endorsement: $350,000 (covers 9 months of loan carry interest and architect re-fees) - Flood: excluded from builders risk policy; GC obtained a separate NFIP commercial policy with a $500,000 building limit for the construction phase
Estimated annual premium: $4,200,000 × 0.42% = approximately $17,640 for the builders risk base form, plus roughly $2,100 for the soft costs endorsement, plus the NFIP premium (separately rated by FEMA).
Month 9 claim: A subcontractor's propane heater ignites framing materials on the third floor over a weekend. Fire loss: $218,000 to framing, sheathing, and installed windows. The builders risk policy pays $208,000 (loss minus $10,000 deductible). Replacement cost basis means no ACV depreciation deduction. The soft costs endorsement covers $41,000 in architect re-inspection fees and 6 weeks of added loan interest while reconstruction occurs.
This scenario is illustrative. Actual claim outcomes depend on policy language, carrier investigation, and the specific facts of the loss.
Frequently Asked Questions
Does the GC's commercial general liability policy cover builders risk losses?
No. The GC's CGL policy covers bodily injury and property damage the GC causes to third parties — it does not cover physical damage to the project itself while under construction. Builders risk fills that gap. The two policies work alongside each other and are both typically required by the owner's contract and the construction lender.
What happens if the project runs over schedule and the builders risk policy expires?
Coverage ends at the policy expiration date unless the policy is extended before it lapses. An unextended gap can leave the entire project uninsured. GCs should set a calendar reminder 60–90 days before policy expiration to request an extension from the carrier. Most carriers will extend if the project delay is documented and the request is made before expiration; post-expiration reinstatement is not guaranteed.
Are subcontractors covered under the GC's builders risk policy?
It depends on the policy's named-insured structure. Many policies list the GC as the named insured and cover all parties with an insurable interest in the project, including subcontractors, by extension. However, some policies require subs to be specifically added. GCs should confirm this language before starting work and require subs to carry their own installation floater for materials they supply and install before those materials become part of the permanent structure.
Is builders risk required by law?
Builders risk is not mandated by statute in most states, but it is almost universally required by project owner contracts and by construction lenders (banks, SBA, private equity) as a condition of closing on a construction loan. Failing to maintain builders risk in compliance with the loan agreement can constitute a loan default.
What is the difference between builders risk and an installation floater?
Builders risk covers the entire project under construction — the structure and all materials incorporated into it — and is typically purchased for new construction or major renovation. An installation floater is a form of inland marine coverage that protects materials and equipment a specific contractor (usually a subcontractor) is responsible for transporting and installing. For a GC, builders risk is the right policy. For an electrical, mechanical, or specialty sub, an installation floater covers their materials until they are turned over to the GC and incorporated into the project covered by builders risk.
Does builders risk cover theft of tools and equipment?
No. Contractors' tools, scaffolding, concrete forms, and heavy equipment are specifically excluded from standard builders risk forms. These are covered by a separate inland marine policy — typically a contractors' equipment floater or tools and equipment policy. GCs should confirm that all owned, leased, and rented equipment has appropriate coverage under their inland marine program.
How is builders risk different from property insurance on a completed building?
Builders risk is a short-term, project-specific policy that ends when construction is substantially complete or the building is occupied. At that point, the owner needs to bind a permanent commercial property policy (building and business personal property). The transition between builders risk and permanent property insurance is a critical handoff — occupying the building or accepting a certificate of occupancy without a permanent property policy in place can create a coverage gap.
Can a GC get builders risk on a renovation of an occupied building?
Yes, but it is more complex and typically more expensive. Carriers require disclosure of the existing building's value, the scope of renovation, and whether any portion will remain occupied during construction. The existing structure and its contents (not being renovated) are generally excluded from builders risk and must remain covered under the owner's existing property policy. A clear delineation between what is covered under each policy must be documented before construction begins.
Why Morrow for General Contractors Builders Risk
1. Independent agency access to multiple carriers. Morrow places commercial builders risk with a panel of admitted and surplus-lines carriers — including markets that specialize in large commercial, wood-frame multifamily, and coastal construction — meaning your project is shopped on its merits, not routed to a single carrier relationship.
2. GC-specific structuring experience. Builders risk has more structural choices than most GCs realize: reporting forms vs. completed-value forms, ACV vs. replacement cost, soft costs sub-limits, transit extensions, and testing/commissioning endorsements. Morrow's producers are experienced in making these elections correctly for commercial construction projects, not just residential builds.
3. Fast certificates and additional insured endorsements. Construction lenders and project owners need evidence of builders risk before they release funds. Morrow prioritizes same-day or next-business-day certificate turnaround for active projects.
4. Contract review coordination. Before binding, Morrow reviews the insurance requirements in the owner-contractor agreement to confirm the builders risk policy's structure, limits, and named insured hierarchy match what the contract and lender actually require — catching gaps before they become claims disputes.
5. Claims advocacy when it counts. A mid-project fire or collapse is a crisis. Morrow's team acts as your advocate in the claims process: helping document the loss, coordinating with the adjuster, and pushing for prompt payment so your project can restart.
Get a Builders Risk Quote for Your Project
Ready to protect your next project? Morrow provides builders risk quotes for commercial GCs across [Morrow to confirm — licensed states]. Most quotes require: project address, construction type, completed value, project start and end dates, and a brief scope of work.
[Get a Builders Risk Quote →] | [Call Morrow: [Morrow to confirm phone]]
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Related Pages
- Commercial Insurance for General Contractors — parent pillar page covering all coverage lines for GCs
- General Liability Insurance for General Contractors
- Contractors Equipment Insurance
- Workers Compensation for General Contractors
- What Is Builders Risk Insurance?
- Builders Risk Insurance Cost
About This Page
Author: Morrow Editorial Team — reviewed by a licensed commercial P&C producer with experience placing course-of-construction coverage for commercial general contractors.
Published: June 2026 | Last updated: June 2026
Sources: - Insurance Services Office (ISO) Builders Risk forms and rating guidance - National Association of Insurance Commissioners (NAIC) market conduct and filing resources - Insurance Information Institute (III) — commercial property and inland marine coverage overviews - Federal Emergency Management Agency (FEMA) — National Flood Insurance Program (NFIP) commercial coverage guidelines - American Institute of Architects (AIA) — A201 General Conditions and A101 Owner-Contractor Agreement (insurance requirements, Article 11) - State insurance department filings and bulletins: Tennessee Department of Commerce and Insurance, Florida Office of Insurance Regulation (FLOIR), Texas Department of Insurance (TDI) - Associated General Contractors of America (AGC) — risk management resources for commercial contractors