Does a Property Owner Need Builders Risk Insurance?
An owner may need it when the owner has a financial interest in a building under construction and no other policy adequately addresses that project exposure.
The owner’s interest can change as a project moves from materials and work in progress to a completed building. 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.
Related Coverage
Sources
- Glossary of Insurance Terms. National Association of Insurance Commissioners; Builders’ Risk Policies. Accessed 2026-09-25.
- Commercial Insurance Guide. California Department of Insurance; Form 700, revised June 14, 2024: Commercial Property > Coverage Forms and Endorsements > Builder’s Risk; Inland Marine; How Can I Purchase Commercial Insurance?; What Should I Expect from a Broker-Agent? Accessed 2026-09-25.
- Builders Risk Coverage Form. Insurance Services Office, Inc.; hosted by Touchpoint Markets; IH 00 70 05 17, copyright 2017 (illustrative specimen): A.1–3, printed pp. 1–2; B, printed pp. 9–11; C–E, printed p. 12. Accessed 2026-09-25.
