On a construction or renovation project, builders risk can be carried by either the property owner or the contractor, and the right answer depends on the contract and who has the most at stake. Getting it clear up front avoids a coverage gap or a dispute after a loss.
When the owner carries it
Owners, including real estate investors on a fix-and-flip and commercial property owners on a ground-up build, often carry builders risk so they control the coverage, the limits, and the claim. This is common when the owner is financing the project, since lenders usually require it.
When the contractor carries it
On many jobs the general contractor carries builders risk and names the owner and lender as additional insureds. The construction contract typically spells out who is responsible, so the first step is always to read the contract.
Coordinating the coverage
However it is placed, builders risk should name the right parties (owner, contractor, and lender), coordinate with the contractor’s general liability and the property’s permanent policy, and hand off cleanly to that permanent coverage when the project is complete. Gaps tend to appear at that handoff.
Questions to ask your advisor
- What does my construction contract say about who carries builders risk?
- Are the owner, contractor, and lender all named correctly on the policy?
- Has anyone confirmed the policy is actually in place, not just assumed?
- How does it coordinate with general liability and the permanent policy?
- What is the plan for the handoff when the project is complete?
What to do
Check what your construction contract requires, then let us confirm builders risk is placed correctly, with the right insureds and limits, and coordinated with your other coverage. We place it for both owners and contractors.
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