Understanding Builder's Risk Insurance: Tips for Getting the Best Price

Obtaining builder's risk insurance is a critical step for anyone involved in construction, whether you are a homeowner building your dream home or a contractor overseeing multiple projects. This specialized insurance protects your investment against various risks that could jeopardize the project before its completion. In this article, we will explore what builder's risk insurance is, what it covers, and practical strategies to obtain the best price.

What is Builder's Risk Insurance?

Builder's risk insurance, also known as contractor's all-risk insurance or course of construction insurance, protects properties under construction or renovation from hazards that might arise. This can include damage from fires, explosions, vandalism, theft, lightning, wind, hail, and many other events [1][3][4]. However, it is essential to note that builder's risk insurance typically excludes certain natural disasters such as earthquakes and floods unless additional coverage is endorsed.

Types of Builder's Risk Insurance

Single Project Policy: This is a common choice for homeowners undertaking one project at a time. It covers new constructions and renovations.
Reporting Form Policy: Designed for contractors with multiple ongoing projects, it requires reporting each project individually up to a specific value.
Blanket Deposit Policy: Ideal for contractors managing multiple projects, it covers all under a single deposit.
Blanket Installation Policy: This policy is suited for contractors handling extensive installations and provides comprehensive coverage.

What Does Builder's Risk Insurance Cover?

Builder's risk insurance protects against numerous damages and losses, including:

Construction Site Damages: These can result from fire, vandalism, theft, or severe weather.
Construction Materials: Coverage extends to materials lost or damaged in transit.
Temporary Structures: This includes fences, scaffolding, and retaining walls used during construction.
Equipment Damage: Protection against costs incurred from damaged or lost construction equipment.
Financial Loss from Delays: Coverage for rental income loss, taxes, and incurred interest on loans due to stoppages in the project.

Factors Influencing the Cost of Builder's Risk Insurance

The price of builder's risk insurance can fluctuate significantly based on several factors:

Project Type: New construction typically costs less to insure than renovation projects due to their higher associated risks.
Location: Projects in areas prone to natural disasters will have higher premiums due to increased risk.
Construction Materials: The type of materials used affects cost—fire-retardant materials typically result in lower premiums compared to wood.
Optional Coverages: Additional coverage for flooding, earthquakes, and other special perils will increase policy rates.
Providers: Non-admitted carriers may include extra fees like policy fees and surplus line taxes, while admitted insurance providers are often more regulated.

How Much Does Builder's Risk Insurance Cost?

Typically, builder's risk insurance costs between 1% to 5% of the total construction budget. For instance, if your project budget is $100,000, you could expect to pay between $1,000 and $5,000 depending on your specific variables [2][5].

Tips for Getting the Best Price on Builder's Risk Insurance

Bundle Policies: Consider bundling your builder's risk insurance with other policies, such as general liability or commercial auto, to secure discounts and better pricing.
Consult with an Expert: Working with an independent insurance agent can help demystify the process—they can provide tailored advice based on your project's specifics.
Increase Deductibles: Opting for a higher deductible can significantly lower your premiums. Ensure it’s a manageable figure in case of potential claims.

Review Policies Carefully: Always take the time to understand policy specifics, including coverage limits, exclusions, and terms. A well-informed decision can save you money and hassle in the long run.
Leverage Multiple Quotes: Do not settle for the first quote you receive. Obtaining quotes from multiple insurers allows you to compare prices and coverage levels, ensuring you find the best deal possible.
Consider Project Timeline: Insurance premiums can be affected by how long a project is expected to take. If you anticipate a longer construction period due to factors like weather or zoning laws, communicate this with your insurance provider to manage policy costs effectively.

Implement Safety Measures: Demonstrating proactive safety and security measures on the construction site may qualify you for discounts. This can include using secured fencing, setting up surveillance cameras, and having onsite security personnel.

By taking advantage of these tips and understanding the various factors that influence builder's risk insurance costs, you can navigate the complex landscape of the construction insurance market more effectively.

Conclusion

Builder's risk insurance is a vital safety net for anyone engaging in construction projects. Gaining an understanding of what this insurance covers, the different policy types available, and the elements that affect cost can empower homeowners and contractors alike. Following the tips provided in this article can significantly enhance your chances of securing a good deal on builder's risk insurance.

Disclaimer

Please consult a professional before making any changes to your insurance to ensure that your specific needs and circumstances are adequately addressed.

References

[1] Rocket Mortgage. (2024, March 1). What Is Builder’s Risk Insurance And What Does It Cover?
[2] Stanton Insurance. (2025, January 1). How Much Does Builder’s Risk Insurance Cost? Best 2025 Guide.
[3] Texas Regional Bank. (2023, August 4). Builder’s Risk Insurance: What is it?
[4] Wikipedia. (n.d.). Builder’s risk insurance.
[5] Embroker. (n.d.). How much does builder’s risk insurance cost?

Next Steps

Evaluate Your Project Needs: Determine the type of project you are undertaking—whether it's new construction or renovation—and assess the specific coverage you will need. This will help in selecting the right builder's risk insurance policy.
Get Multiple Quotes: Don’t settle for the first quote. Reach out to various insurance providers to compare premiums and coverage options. This will allow you to make an informed decision based on price and policy features.
Consult with Insurance Experts: Work with an independent insurance agent who specializes in builder's risk insurance. They can provide valuable insights tailored to your project and help you find the best deal.

Implement Safety Measures: Enhance your construction site’s safety protocols. Investing in security measures may qualify you for discounts on your builder's risk insurance policy. Consider options like fencing, surveillance systems, and onsite security personnel.
Review Policy Details Thoroughly: Before finalizing any policy, read through the coverage specifics, including exclusions and limits. Knowing what is and isn’t covered will prevent unpleasant surprises down the line.
Consider Duration and Costs: If your construction project has a longer timeline, communicate this with your insurer. Understanding how project duration affects premiums can help you manage costs effectively.

Explore Bundling Options: If you own other insurance policies, ask about bundling. Combining builder's risk insurance with general liability or other coverage types can often lead to discounts.

By following these steps, you’ll be well on your way to securing the best builder's risk insurance for your construction project. For further guidance, consider checking out more resources, such as Rocket Mortgage's guide on builder's risk insurance, to deepen your understanding of your options.