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Every contractor must be properly insured. It ensures that the project is completed to your client’s satisfaction, but it also ensures you’re protected, should the unexpected strike.

Builder’s risk liability coverage is one type of insurance that you should consider ahead of every project. By knowing what it covers, you can decide what kind of policy you need.

What is Included With Builder’s Risk Liability Coverage

Builder’s risk insurance is designed to protect the project while it is in progress before a more traditional insurance policy is able to kick in after the project is complete. Should something happen to the structure that is out of your control during the construction process, builder’s risk liability coverage can cover the cost of repairs and replacements.

Fire damage

A builder’s risk policy can protect against direct damage caused by a fire, but it can also cover the costs associated with smoke and heat damage. For example, scorched siding and burned framing could be replaced with this type of policy.


Vandalism can include things like broken windows and graffiti, but it can also include more costly damage, like electrical wiring that has been torn out and clogged pipes that have to be replaced. A policy can cover the costs associated with making repairs and installing replacements.

On-site theft

The unguarded nature of construction sites makes them a target for thieves who understand the valuable nature of the materials that are used in the construction process. From copper pipes to lumber, builder’s risk liability coverage can cover the costs associated with third-party theft.

Structural damage from some whether events

A policy can cover some weather events that include:

  • Lightning
  • Hail
  • Acts of God, like hurricanes

It is important to look closely at your policy because it does not cover all kinds of weather events. For example, damaged due to flooding may not be covered unless it is added to your policy.

Property That is Covered

Builder’s risk insurance is specially designed to cover the buildings and structures that are under construction. That includes all of the materials and supplies that are required to complete the project.

A builder’s risk policy may also protect some of the equipment that is being used during the construction process. You’ll want to check the details of your policy to ensure it covers your equipment, whether it’s on-site or in transit.

What Builder’s Risk Liability Insurance Pays For

Builder’s risk liability coverage is meant to pay for any damage that is made directly to the structure. However, it can also cover expenses that aren’t directly related to, but influenced, by the construction process, especially if they cause delays.

Other costs your policy may cover include:

  • Lost sales
  • Lost rental income
  • Additional interest paid on loans
  • Real estate taxes

Extension Options

Like most other policies, builder’s risk insurance doesn’t cover every eventuality. A basic policy is meant to be customized to meet your needs so you can better control how much your policy costs.

Extensions can be added to your policy to ensure you get the coverage you need. Common extensions include:

  • Certain natural disasters, like floods
  • Protection for temporary structures, like scaffolding
  • Debris removal and disposal after a loss
  • Cleanup of pollutants

Some things, like employee theft and workmanship, as well as some kinds of equipment, aren’t covered by this type of policy. That’s why it’s so important to talk to a qualified insurance broker about your needs.

Contact DJM Insurance and we would be happy to customize a builder’s risk insurance policy for you. We can also help you customize other contractor’s policies to ensure you get the coverage you need at the right price.

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