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Builders risk: who pays if the build burns down?

Gerald Burns, Licensed Insurance Agent · August 2026

A general liability policy covers damage you cause to somebody else. It does not cover the building you are putting up. That structure, with its framing, the materials stacked beside it and the windows waiting in the trailer, needs its own policy, and the name for it is builders risk.

What builders risk actually covers

The work in progress itself: the structure while it is going up, plus building materials on site, in transit, and in temporary storage off site. Fire, wind, hail, lightning, vandalism and theft are the usual covered causes. Most policies can be extended to cover soft costs: the extra loan interest, permits and fees you pay while the schedule slips after a loss.

Theft is the claim, not fire

Everybody buys builders risk picturing a fire. What actually happens is a trailer of copper, appliances or lumber disappearing over a weekend, or wind taking a partially framed structure before it is sheathed and braced. An open frame is far more vulnerable to weather than the finished building will ever be.

Who buys it: settle this in the contract

Owner or general contractor can carry it, and both have an insurable interest. What causes the argument is nobody writing it down. If the contract says the owner provides builders risk and the owner assumed the GC had it, the loss lands on whoever is left holding it. Read the insurance article of the contract before the first delivery, not after the claim.

The gap at the end is where claims die

Builders risk ends at completion, at occupancy or on a fixed expiration date, whichever the policy names first. The permanent property policy has to be in force from that same moment. A building that is finished but not yet occupied, sitting between the two policies, is a genuinely uninsured building. Put the handover date in your calendar and call before it arrives.

Get the term and the limit right

The limit should be the completed value of the project, not what has been spent so far. Underinsure it and a partial loss can be reduced. On the term, build in slack: projects run late, and extending a policy mid-course is easier to arrange before it lapses than after.

One more thing: builders risk is separate from workers' compensation and general liability. It covers the thing being built. You will usually need all three on a job of any size. See our contractor insurance page.