What is "builder's risk insurance"?

Builder's risk insurance is specifically designed to provide coverage for buildings that are under construction. This type of insurance protects against certain risks that may arise during the construction process, such as fire, theft, vandalism, and some weather-related damages. It is essential for contractors and developers to have this insurance because construction sites are vulnerable to various risks that could lead to significant financial losses.

Unlike insurance for completed buildings, which might cover broader risks including natural disasters, builder's risk insurance focuses on the construction phase and the unique challenges it presents. It's also distinct from liability insurance, which covers injuries on the job site, and equipment theft insurance, which targets the loss of tools and machinery rather than the structure being built.

Having builder's risk insurance ensures that any financial setbacks due to these specific risks are managed effectively, allowing projects to proceed with a level of financial security.