Builders Risk Insurance

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Insurance Services by Madison Avenue, our California Division, offers complex commercial and residential builders risk insurance coverage and course of construction insurance policies for builders, general contractors, developers, homeowners and lenders across the State of California. Policies provide coverage for properties while under construction.

Partner with Insurance Service by Madison Avenue for your builder’s risk insurance needs. Connect with one of our team members today.

Our insurance specialists know the greater Los Angeles area – from San Diego & Newport Beach, to Laguna, Huntington and Long Beach, to Torrance, Santa Monica, Malibu, Thousand Oaks and Ventura.

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A Builder’s Risk or Course of Construction Insurance Policy is a specialized insurance policy designed to cover a construction project during the building phase. It protects against a wide range of risks that can occur while a property is being constructed, renovated, or undergoing major repairs.

The property owner, contractor, or developer typically purchases this policy. Coverage can last from 6 months to multiple years.

Our expert teams of insurance professionals are experienced in the builder risk and course of construction insurance markets and work to find the right coverage for your projects specific needs.

For builders, we offer dedicated, knowledgeable agents specifically from our contractor insurance division who specialize in complex policy writing. Coverage can extend to one home or an entire development.

For homeowners, we offer dedicated, knowledgeable agents specifically from our personal insurance division who specialize in complex policy writing for custom and luxury homeowners.

Who Needs Builder’s Risk Insurance Coverage?

The Property Owner, The General Contractors, Developer and Bank. The insurance policy protects the project and financial investment of all parties if the property is damaged during construction. There are additional costs associated with delay or restarts due to large losses such as a fire, theft, earthquake and more in CA, OR, WA and ID.

When Does Builder’s Risk Insurance Policy Apply?

It Applies During Construction: A builder’s risk insurance policy is only in effect during the construction or renovation phase. Once the project is completed and ready for occupancy, the coverage typically expires, and a standard insurance policy is written for the property owner.

How Much Course of Construction Insurance Coverage is Needed?

The initial coverage policy limit should be enough to cover the full replacement cost of the property, including materials, labor, and any potential building code requirements. This is usually based on the estimated cost to rebuild the entire project from the ground up.

What are Key Features of a Builder’s Risk Insurance or Course of Construction Policies?

Building Coverage
Damages to buildings caused by fire, wildfires, vandalism, theft, wind, hailstorms, lighting, earthquakes, flood and mudslide.

Coverage for On-Site Materials and Equipment
This includes supplies like lumber, steel, windows, and other building materials. Coverage often includes temporary structures like scaffolding, tools, and construction trailers on-site.

What Coverage is Generally not Included on a Builder’s Risk Insurance or Course of Construction policy?

Liability Coverage
Typically, a builder’s risk insurance policy does not provide liability coverage for injuries or damage caused to third parties during construction.

This is often covered by the general contractor’s general liability policy, which is purchased separately by the contractor (for their protection). The homeowner can also be listed as an “additional insured” on the contractor’s liability policy. This would extend coverage for claims they are named in due to the acts of the contractor and/or their subcontractors due to construction.

What if the Liability Claim Does not Have Anything to do With the Construction Project?

Such as a neighbor tripping and falling on downed tree branches after a windstorm?

An Owners and Contractors Protective liability would likely deny coverage as the fall was not due to do the building construction.

An Owners Interest policy would provide coverage as liability extends to the full premises.

Apartment Building Construction Liability – Claim Example

A newly constructed apartment building has a deck collapse during a tenant’s happy hour party and several guests are injured;

IF the Owners & Contractors Liability Policy included coverage for “completed operations” there would be coverage. If it did not, the apartment insurance general liability coverage would likely decline coverage stating this was a construction defect. This is assuming there were not any additional factors pointing back to the property management or tenant’s liability.

As you can see these policies and contracts are complex. Having an experienced team to walk you through coverage decisions is important.

Both Owners and Contractors Protective (OCP) Liability and Owner’s Interest (OIP) Liability offer protection for property owners during construction.

Owners and Contractors Protective Liability insurance provides coverage to supplement the Owner’s “additional insured” status on the General Contractor’s policy during construction.

The policy covers the Owner for Bodily Injury or Property Damage caused, in whole or in part, by an independent contractor’s work for the Owner. Normally, the contractor purchases the policy to provide coverage for vicarious liability that the Owner incurs as a result of the contractor’s acts or omissions on the project.

The policy also responds to liability arising out of the insured’s own acts or omissions in connection with its general supervision of the contractor’s operations.

Owner’s Interest Liability insurance is a broader coverage that provides full General Liability limits for property owners, including Premises and Completed Operations.

It can also include Extended Completed Operations up to the statute of limitations for construction-related claims.

This coverage is intended to be contingent to the General Liability limits of the General Contractor but can drop down and pay covered losses that are un-collectible under the General Contractors policy because limits have reached maximum limits or coverage is otherwise excluded.

Insurance Services by Madison Avenue