If you’re building, renovating, or having a home or commercial property built, there’s a good chance you’ve heard the term “builders risk insurance” thrown around — usually by your lender or your contractor. But what does it actually cover, and more importantly, whose responsibility is it to buy it?

The short answer: it depends. And getting it wrong can leave you exposed to a costly gap in coverage right when you need it most.

What Is Builders Risk Insurance?

Builders risk insurance (sometimes called “course of construction” insurance) is a special type of property policy that protects a building while it’s under construction or major renovation. It covers things a standard homeowners or business property policy won’t, including:

• Fire, wind, and lightning damage to the structure while it’s being built
• Theft of building materials or supplies on site
• Vandalism during construction
• Damage from certain weather events
• Sometimes, in-transit materials on their way to the job site

Standard insurance policies are written to cover finished buildings. A half-built house or a commercial space mid-renovation doesn’t fit that mold — which is exactly why this specialized coverage exists.

Who’s Required to Buy It — The Buyer or the Builder?

This is where a lot of confusion happens, and honestly, there’s no single answer. It really comes down to who owns the risk during construction, and that’s often spelled out in your contract or your lender’s requirements.

When the buyer (property owner) is required to carry it:
If you’re the one financing the construction — say, you own the land and hired a contractor to build your home — your lender will almost always require you to have builders risk coverage in place before the loan closes. Since you technically own the structure as it’s being built, the bank wants to make sure their investment is protected from day one.

When the builder (contractor) is required to carry it:
In other situations, especially with spec homes, commercial developments, or larger construction contracts, the contract between the builder and the property owner may put the responsibility on the builder. Contractors often need to show proof of builders risk coverage to satisfy contract terms, protect their own investment in labor and materials, or meet requirements from a general contractor or developer they’re working under.

Sometimes it’s shared or negotiated:
On bigger projects, the builder and owner may even negotiate who carries the policy, or a single policy might list both parties as insureds. This is another reason it’s worth having a conversation with your agent before assuming the “other side” has it handled.

Why This Matters So Much

Here’s the risk: if a fire, storm, or theft happens mid-project and nobody has builders risk coverage in place — because each side assumed the other was handling it — the financial fallout falls on whoever’s name is on the deed or the contract. That can mean tens or hundreds of thousands of dollars out of pocket to rebuild something that was never finished in the first place.

The best way to avoid this? Don’t assume. Check your contract, check with your lender, and check with your insurance agent — before the first shovel hits the ground.

We Cover Both Sides of the Table

At Ameriguard Insurance Agency, we write builders risk policies for both property owners and builders/contractors, so no matter which side of the project you’re on, we can make sure the right coverage is in place — and make sure you’re not left guessing whether you’re protected.

If you’re planning a new build, a major renovation, or a commercial construction project, give us a call before you break ground. We’ll walk you through exactly what’s needed, who needs to carry it, and get you a policy that fits the project.

Now writing Insurance is Indiana, Colorado, Kentucky, Georgia, Arizona, Ohio, Illinois, Delaware and Wisconsin.