Builders Risk Insurance for Construction Projects

The contract between the project owner and the general contractor typically specifies which party is responsible for procuring builders risk coverage. On most commercial projects, the owner purchases the policy and names the general contractor and subcontractors as additional insureds. On many residential and smaller commercial projects, the general contractor procures coverage. ALKEME reviews your contracts to ensure the responsible party is clearly identified and that the policy terms satisfy all contractual requirements.

Most builders risk policies cover theft of building materials and supplies that will become a permanent part of the structure. However, contractors tools and construction equipment such as excavators and generators are typically excluded and require a separate inland marine or equipment floater policy. ALKEME coordinates builders risk and inland marine placements together to ensure there are no gaps between what each policy covers.

It depends on the wording of the policy you hold. Builders risk forms commonly provide that cover ends on the earliest of several triggers, which may include substantial completion, owner acceptance, occupancy or putting the building to its intended use, or the stated expiry date on the policy. Which triggers apply, and how each is defined, varies by form and endorsement, so the termination provisions of your own policy control. Any delay beyond the stated period generally requires an extension endorsement, and extensions are subject to underwriter agreement rather than automatic. ALKEME tracks project timelines and initiates extension requests well before the stated expiration date to reduce the risk of a gap during the final stages of construction.

The coverage amount should equal the completed value of the project, including all hard construction costs, materials, and labor. Soft costs such as architectural fees, permit costs, and financing charges should be included if soft cost coverage is elected. ALKEME works with clients and their project cost estimators to establish accurate coverage limits that reflect the true completed value, preventing coinsurance penalties that can reduce claim payments when the insured value is understated.