The short answer: builder’s risk insurance covers a building and its materials while the building is under construction. It pays when fire, wind, theft, or vandalism damages the work before it is finished. Your construction contract decides whether the owner or the general contractor buys it. Coverage usually ends when the building is occupied or accepted. In South Carolina, coastal jobs often carry a separate named-storm deductible.
What does builder’s risk insurance cover?
Think of it as property insurance for something that does not exist yet. It insures the structure as it goes up, including materials delivered to the site and waiting to be installed.
Covered causes usually include:
- Fire and lightning, the classic builder’s risk loss on a wood-frame job
- Wind and hail, including storm damage to framing and sheathing before it is weathertight
- Theft and vandalism, such as lumber, appliances, copper, and HVAC equipment taken from an unsecured site
- Collapse from covered causes during construction
Most policies also cover materials in transit to the job and materials stored off site, usually with smaller limits. Temporary structures such as scaffolding and forms are sometimes covered and sometimes not, so ask.
What does builder’s risk not cover?
These are the gaps that surprise builders:
- Your own faulty work or design. Redoing the defective work itself is generally excluded. Damage it causes to other parts of the building may be covered, depending on the form.
- Tools and equipment. Your compressors, saws, and rented equipment need inland marine coverage, not builder’s risk.
- Liability. If someone is hurt on the site or a neighbor’s property is damaged, that is your general liability policy. Our page on general contractor insurance in South Carolina covers how the pieces fit together.
- Flood and earthquake. Often excluded or tightly limited unless you add them.
- Wear, mechanical breakdown, and employee theft.
Who buys builder’s risk, the owner or the contractor?
The contract decides. Read the insurance section before you sign.
Many standard commercial contract forms assign builder’s risk to the owner. Residential builders and smaller commercial contracts often put it on the contractor, especially when the builder is selling a finished house. Spec builders almost always carry it themselves.
Two rules matter more than who pays:
- Exactly one policy. Two overlapping policies waste money and invite an argument between carriers. No policy leaves the building uninsured, and that usually only comes to light after the fire.
- Everyone named. The owner, the general contractor, and usually the subs should all be named, with a waiver of subrogation so the carrier cannot turn around and sue one of the people it insures.
When does builder’s risk coverage start and end?
It should start before materials arrive on site, not when framing begins. A pallet of windows stolen the week before framing is a builder’s risk loss only if the policy was already in force.
It usually ends at the earliest of:
- the building being occupied or put to its intended use
- the owner accepting the work
- the policy expiring
- the project being abandoned
Policies are written for a term, often three to twelve months. Jobs run long. If yours will, extend the policy before it expires. Some forms also restrict coverage if work stops for an extended period, so tell us if a project is going to sit.
What changes on a South Carolina job?
Hurricane season. Wind is generally covered, but projects near the coast often carry a named-storm deductible set as a percentage of the project value, not a flat dollar amount. On a large coastal build, that percentage can be real money, so price it into the job. Carriers also generally stop binding new coverage once a named storm threatens the area, so a job in Charleston, Beaufort, or Horry County should be insured before a storm is on the map.
Inland storms count too. Midlands jobs see wind and falling-tree losses from systems that came ashore hundreds of miles away. Framing that is not yet sheathed is the most exposed it will ever be.
Renovations. Builder’s risk can cover new work on an existing building, but the existing structure is often left out unless you ask for it. Meanwhile, the owner’s property policy may restrict coverage during a major renovation. Check both before demolition starts.
How is builder’s risk priced?
Most policies are written on the completed value of the project, meaning the policy is set at what the building will be worth when finished, even though the value builds up gradually. The rate depends on construction type (wood frame costs more to insure than masonry or steel), location and distance to the coast, the policy term, theft protections on the site, and the deductibles you choose.
We are an independent agency in Sumter, and we quote builder’s risk across multiple carriers for residential builders, spec builders, and commercial general contractors statewide. If your contract requires the license bonds too, we place those in the same office.
Frequently asked questions
What does builder’s risk insurance cover? The building and the materials going into it while it is under construction. Typical covered causes include fire, lightning, wind and hail, theft, and vandalism. Most policies also reach materials in transit or stored away from the site, often with a smaller limit. Your tools and equipment, liability claims, and your own faulty work are generally not covered.
Who pays for builder’s risk, the owner or the contractor? Whoever the construction contract assigns it to. Many standard commercial contracts put it on the owner, while residential builders and smaller commercial contracts often put it on the contractor. The important thing is that exactly one party buys it and everyone with an interest in the building is named on it.
When does builder’s risk coverage end? Usually at the earliest of a few events: the building is occupied or put to its intended use, the owner accepts the work, the policy term expires, or the project is abandoned. If the job runs long, extend the policy before it expires, because an expired builder’s risk policy and a half-finished building is a bad combination.
Does builder’s risk cover hurricanes in South Carolina? Wind is usually a covered cause, but coastal South Carolina projects often carry a separate named-storm deductible, commonly a percentage of the project value. Carriers also generally stop binding new coverage once a named storm threatens the area, so buy before hurricane season heats up. Flood is often excluded or limited and may need to be added.
Does builder’s risk cover a renovation? It can cover the new work and materials, but the existing building is often not included unless you ask for it. The owner’s property policy may also restrict coverage during a major renovation. Check both policies before demolition starts so nothing falls between them.
Starting a build? Call or text us at 803-848-0089 with the project value, construction type, address, and start date, and we will quote builder’s risk before the first delivery.