Definition
Builders risk insurance covers a property under construction against damage, theft, and vandalism. It's temporary and required by lenders during building.
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Builders risk insurance is required by lenders and contractors during construction. It covers the dwelling, fixtures, materials, and equipment on-site against covered perils like fire, wind, theft, and vandalism. Coverage is temporary and automatically expires when the home is occupied or substantial completion occurs. Policies include deductibles and may exclude certain perils like floods. Contractors are typically named as additional insureds. This insurance protects the builder, contractor, and lender's interests during the construction period.
Pro Tip
Ensure builders risk insurance is in place before construction begins. It's non-negotiable for lender protection.
Example
Builders risk insurance protected a new construction home during the 8-month building process until the homeowner could occupy it.