Two of the most common contractor policies sound like they should overlap, and they do not. General liability and builder’s risk answer different questions, and a job can need answers to both.
What general liability does
General liability is about harm to other people and their property. If a passerby is injured near your site, or your work damages a neighbor’s property, GL is generally the policy that responds, subject to its terms and exclusions. It follows your operations, not any single structure. What it is not built to do is rebuild the project you are working on. That is a common and costly surprise.
What builder’s risk does
Builder’s risk covers direct physical loss to the project while it is under construction. Think fire, wind, theft of materials, and similar perils, subject to the policy. It usually covers the structure and often the materials and supplies staged for installation. It is a project policy with a start and an end, typically running until the work is completed or handed over. Where GL follows you, builder’s risk stays with the job.
Where the gap opens
The gap opens when a loss hits the work in progress. A fire in framing, a storm that flattens partly built walls, a theft of materials waiting to be installed. GL generally does not pay to rebuild that work, because it was never insuring the structure. Without builder’s risk, the cost of redoing the damaged project can land on whoever is responsible for the work under the contract, which is often the contractor.
Who buys which
On many jobs the owner carries builder’s risk, and on others the contractor is required to. Neither is automatic. Read the contract, confirm who is providing the coverage, and check that the named parties, the limit, and the term match the actual job. A certificate showing general liability tells you nothing about whether the structure is insured, so do not treat one as proof of the other.
What builder’s risk does not do
Builder’s risk is focused on physical damage to the project, so it is not a catch-all. It generally does not respond to injuries on the site, which fall to general liability for third parties and to workers compensation for your crew. It also has a term, typically ending when the work is completed or the project is occupied or handed over, so coverage for the finished building usually shifts to a permanent property policy at that point. Confirm when your builder’s risk ends and when the next policy picks up, because a gap between the two is easy to miss and expensive to discover after a loss.
Which one fits
This is rarely an either-or choice. General liability handles what you might do to others and is a baseline for almost any contractor. Builder’s risk handles the project itself during construction and is tied to a specific job. If you are doing ground-up work or a major renovation and no one has confirmed builder’s risk, that is usually the gap to close first, alongside the GL you already carry.
Questions to ask your advisor
- Does my contract make me responsible for the structure until it is handed over?
- Has the owner bought builder’s risk, and can I see proof of it?
- If I need to carry builder’s risk, what limit and term match this job?
- Are stored materials and materials in transit covered, subject to the policy?
- How do my GL and builder’s risk fit together so nothing falls between them?
General liability and builder’s risk are not competitors, they are teammates that cover different risks. The mistake is assuming one does the other’s job. Confirm who insures the people and property around the site, and who insures the project itself, before the first load of materials shows up.
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