From the first day on site, a construction project is exposed to risks that can disrupt schedules and cut into profit. A sudden storm can damage open framing before inspection. High-value materials can disappear overnight. Trespassers — from thrill-seeking teenagers climbing scaffolding to scrap hunters prying into storage — can leave behind damage or stolen equipment. For developers, contractors, and commercial property owners, one incident can derail financing and strain client relationships.

At Kavana Insurance, we structure builders’ risk insurance to protect in-progress work, materials, and temporary structures against the real-world threats every build faces. In this guide, we explain who needs builders’ risk insurance and when to purchase it, so your project moves from groundbreaking to handover without costly interruptions.

What is builders’ risk insurance?

Before deciding who should purchase builders’ risk insurance, get clear on the scope and limits. Builders’ risk insurance — also called builders’ risk coverage — is a project-specific property policy for buildings under construction or undergoing major renovation. It safeguards completed work, materials on site, approved off-site storage or in transit when scheduled, and essential temporary structures needed for the build. When added, it can also reimburse defined soft costs tied to covered delays, such as design revisions, additional financing charges, re-permitting or expedited freight.

This coverage is not the same as construction insurance. builders’ risk insurance protects the physical project, construction insurance is the broader protection package for the business — liability, workers’ compensation, commercial auto, umbrella, pollution, surety, and other lines.

In the builders’ risk coverage in the USA market, a well-structured policy may include:

  • The in-progress structure and permanently installed materials
  • Materials stored on site, at an approved off-site location, or in transit (when scheduled)
  • Temporary works such as scaffolding, forms, fencing, and signage
  • Optional soft costs after a covered loss (e.g., redesign hours, interest during delay, re-permits, expedited freight)

Policies typically attach on the policy’s effective date once risk of physical loss exists (often just before mobilization or when materials are at risk) and end at substantial completion, occupancy, or formal acceptance, as defined in the form. For broader protection beyond the jobsite, our construction insurance programs align property, liability, and workers’ compensation into one coordinated plan.

Who typically needs builders’ risk insurance?

Before scopes are awarded or funds are released, decide who needs builders’ risk for this project and state builders’ risk insurance who pays in the contract. That clarity prevents costly coverage gaps that can leave you exposed if materials go missing or unfinished work is damaged.

General contractors and subcontractors

For most commercial projects, the answer to “builders’ risk insurance, who needs it?” is the prime contractor. Agreements typically require the GC to purchase the policy, set limits, and name all parties as insureds. Subcontractors may add protection for high-value scopes if the project policy excludes their interests or uses deductibles they can’t absorb. Finalize who should purchase builders’ risk insurance during preconstruction and align certificates with who actually controls work and materials.

Property developers and real estate investors

Developers often keep the policy under their control to manage valuation methods, soft cost sublimits, and testing exclusions. Lenders ask who needs to purchase builders’ risk insurance at the term sheet stage because an unfinished asset has no revenue to cushion a loss. For multi-state portfolios, standardize builders’ risk coverage in the USA as part of the capital plan so terms stay consistent across phases and markets.

Commercial property owners undertaking major renovations

A gut renovation exposes existing structures to many of the same hazards as new construction — fire, water intrusion, theft, or vandalism. Standard commercial property forms often limit or exclude coverage while a building is “under construction,” so owners arrange a project-specific policy that protects work in place, stored material,s and temporary works. This type of policy is written on commercial terms with lender-required clauses and higher limits, unlike builders’ risk insurance for homeowners, which is intended for individual property owners and smaller residential projects.

Construction project managers and consultants

Owner’s reps and program managers coordinate requirements and may place the policy on the owner’s behalf when the contract assigns that role. Their job is to keep the binder and endorsements current, satisfy lender conditions, and move a claim without delays. RFPs and master service agreements should specify who should purchase builders’ risk insurance, who sets limits and deductibles, and escalation paths so builders’ risk insurance who pays is settled before mobilization.

Reasons to get builders’ risk insurance for building contractors

Margins are thin, schedules are tight, and funding moves on dates. Make builders’ risk insurance a working line item for four clear business reasons:

Reason 1: contracts and lenders often require it

Most standard agreements and loan conditions make the policy a condition of mobilization and draws. They also spell out who should purchase builders’ risk insurance — often the owner or the GC — and what limits, deductibles, and named insureds must appear on the binder. Placing the policy early avoids funding delays and keeps work moving when the first inspection window opens.

Reason 2: it protects in-progress work and on-site materials

Uninstalled value stacks up quickly: switchgear, rooftop units, glazing, custom millwork. A storm, a burst line, or a theft can turn that investment into an overnight loss. Well-structured builders’ risk coverage pays to repair or replace damaged work and stolen materials at current prices, so you aren’t clawing margin back from trades or cutting scope to stay on budget.

Reason 3: it limits liability disputes between parties

One project policy that names all parties keeps carriers from arguing over fault after a loss. Clear responsibilities reduce cross-claims and legal spend, and they help preserve working relationships with owners and subs. Just as important, documenting builders’ risk insurance who pays in the contract closes a common source of conflict before it starts.

Reason 4: helps maintain project schedules and budgets

Losses don’t stop at material replacement. Regaining the timeline may require expedited freight, temporary protection, redesigned hours, permit reissuance, or overtime. A policy written with the right soft cost provisions turns a setback into a managed event, not a chain reaction of missed milestones and financing penalties.

When should you buy builders’ risk insurance?

Timing decides whether a loss becomes a covered claim or a direct hit to your budget. Treat placement as a scheduling decision tied to permits, financing, and deliveries.

Before construction or renovation begins

Bind coverage before mobilization. Site prep, demolition, temporary utilities, staging, and early deliveries already create exposure. Trespass, water intrusion or an equipment mishap can trigger a loss before the first inspection. Putting builders’ risk coverage in force from day one keeps the site protected as soon as work starts.

After securing permits and finalizing plans

Underwriters rate using stamped drawings, a finalized budget, project milestones, and your site security plan. Placing the policy after permits are issued and plans are finalized reduces costly amendments and keeps the valuation accurate. This is also the cleanest point to document who needs to purchase builders’ risk insurance and align limits, deductibles, and named insureds with contract terms.

When required by lenders or contracts

Many loan covenants and standard agreements require binding at or before closing. Meeting those conditions early prevents draw delays and avoids last-minute scrambles to add endorsements the lender expects. If the contract assigns responsibility, reflect it on certificates so coverage evidence matches the roles on the project.

Before materials are stored on-site

High-value equipment and finishes often arrive weeks ahead of installation. Start coverage before the first delivery so theft or weather damage doesn’t become a self-insured loss. If you stage inventory off-site or ship across multiple states, align terms for builders’ risk coverage in the USA — especially for approved storage locations and transit — so protections stay consistent across jobs.

We’re right on to protect your next build from day one

At Kavana Insurance, we align coverage with your contract terms, lender conditions, and project milestones. We structure the policy around real exposures — work in place, stored materials, temporary works, approved off-site storage and scheduled transit — and document who purchases and who pays so budgets stay intact. For more than 20 years, we’ve helped thousands of U.S. builders and owners put practical protection in place across single-site jobs and multi-state portfolios, integrating builders’ risk insurance with the broader construction insurance program when it actually adds value.Send us your drawings, budget, and site security plan; we’ll turn them into clear terms, limits, deductibles, and soft cost provisions that fit your timeline. Ready to move? Contact our team, and we’ll respond quickly so coverage is placed without slowing the schedule.