Glossary

Builder's risk

Temporary property insurance on a structure being built or substantially renovated, covering materials and work in place until the project is finished.

Also called: builder's risk insurance, builders risk policy, course of construction coverage

Builder's risk is a temporary property policy that covers a building under construction, plus materials on the site and sometimes materials in transit or stored elsewhere. It pays for physical damage from perils such as fire, wind, theft and vandalism during the project, and it ends when the building is complete, accepted or occupied. Contractors often carry it, but a homeowner who is building a house, adding a large addition or gutting a home may need to buy it directly, depending on the contract and the lender.

The policy is usually written for the project's completed value and a set term, with a deductible. Say you are building a $450,000 house over ten months (hypothetical): the policy insures the work in place as the house rises. Flood and earthquake are commonly excluded or need separate arrangements, and builder's risk generally does not cover your liability.

Do not assume your existing homeowners policy fills the gap. A policy on a house under construction may restrict or exclude coverage, and a lender will want proof of insurance before it releases draws. Before you start, ask your lender, contractor and agent who must carry it, who is named, and when it converts to a regular homeowners policy. See the homeowner's builder's risk guide and the new construction guide.

Last reviewed October 10, 2026

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Related terms

Vacant dwelling policy A specialty property policy for a house nobody lives in, written because owner-occupied forms restrict coverage once a home sits empty. Dwelling fire policy A property-only policy for a house, usually one that is rented, vacant or seasonal, sold without the liability package of a homeowners policy. Dwelling coverage (Coverage A) The part of a homeowners policy that pays to repair or rebuild the house itself, including attached structures such as a garage, porch or deck. Binder A short-term written confirmation that coverage is in force while the full policy is being issued, often used as proof of insurance at a home closing. Exclusion A policy provision that removes coverage for a stated cause, type of loss, property or circumstance that the coverage would otherwise reach. Named perils Coverage that applies only to the causes of loss listed in the policy, so a claim is paid only if the damage came from one of them.

Related guides

Builder's risk insurance for a home under construction Builder's risk insures a house while it is built. Who buys it, what it covers, how flood and wind are handled, and when your homeowners policy takes over. Insuring a home during a renovation Remodeling changes your risk and replacement cost. What to tell your insurer, what the HO-3 says about construction, and how to check a contractor's coverage. Insuring a newly built home How to insure a new-construction house: who covers it before closing, how to set the dwelling limit, what lenders need, and why defects are not a claim.