Does a Property Owner Need Builders Risk Insurance?

Confirm who buys the policy, which parties are insured, and when permanent property coverage begins. The NAIC describes builders risk as coverage for buildings in the course of construction, including certain construction equipment, machinery, and incidental materials. The exact insured property and who may claim under a policy depend on its wording.

An owner and contractor can allocate insurance duties by contract, but the allocation should be reflected in the policy. The specimen ISO form names the insured in the declarations and has specific rules for when coverage ceases, including acceptance by the purchaser and the end of the policy term. Those are specimen terms, not a promise that every form uses the same triggers.

Before work starts, compare the owner’s existing property insurance with the proposed construction coverage. Identify the lender, general contractor, and other parties that need a defined interest; confirm project value, location, start and end dates, and what happens when the building is occupied or accepted.