Does a Contractor Need Builders Risk Insurance?

General liability covers a different exposure, and builders risk may exclude the contractor’s tools. Builders risk addresses physical loss to covered construction property. The NAIC glossary describes the line in those terms; it is distinct from liability coverage for injury or damage claims made by other people.

Do not assume a contractor is protected merely because the project owner has a policy. The illustrative ISO form treats the named insured shown in its declarations as “you,” and it lists contractor tools and equipment as property not covered under that specimen. Another policy may define insureds or covered property differently.

Review the construction agreement for responsibility for materials, work in progress, and insurance procurement. Then check the quote’s named insureds, additional insured wording if relevant, project description, limits, and exclusions. Keep separate coverage in view for the contractor’s own tools, vehicles, liability, and employee injuries.