What Is a Builders Risk Coverage Form?


Building a residential building involves labour, tools, machinery, building material etc that need protection from all external factors.

Residential builders risk insurance coverage form is an insurance policy that covers both residential and commercial buildings under construction or under renovation.

Residential builders risk insurance form is one of the most commonly issued form during the construction of a custom home or home remodelling for construction coverage. The insurance covers all exposures from the time a nail is hammered in a home till the finish of remodelling or construction.

Whether your client is an owner, home builder, house-flipper, a development company or investment company, a comprehensive residential builders risk policy for their new home construction or home remodelling project is required. The policy is present at the end of a reporting or completed value form. There is no standard contract form or a policy to fill out as such.

Obtaining a Builders Risk Coverage Form

Insurance agents can obtain the policy a reporting form, a completed value form, or an inland marine coverage form. Builders risk can be written in two ways:

  • First is a policy that covers losses that are specifically listed.
  • The second policy includes all things apart from the specifically excluded items.

Policyholders may add some of the excluded items for an additional premium.

The limit of coverage allowed is the value of the completed project. The policy must be purchased when the project is less than 30% complete and will list a level of completion when the coverage automatically ends. Other events that will trigger an early end to coverage include:

  • Owner taking possession of the property after specific days of occupancy
  • In case the project is abandoned
  • If the project remains idle for 60 days
  • If the project is past 90 days of completion

Many providers allow a policy to cover such delays in construction if they have occurred due to casualty on the construction site. The builder must have a minimum amount of experience to take this policy.

Insured Party Under a Builders Risk Coverage Form

The named insured may be the property’s contractor or a developer, but in most cases, it is the building owner or homeowner.

The policyholder should be the owner of the property for the maximum benefit of the policy. Usually, a claim is made by the property owner in case of any damage. The owner will reimburse the builder for damages.

Most insurance providers will not underwrite a building if it is not complete. In this case, the builders risk coverage form is the best insurance option.

Key takeaways:

  • Residential builders risk insurance is an insurance policy that covers property against damages while it is being remodelled or freshly constructed.
  • The coverage does not provide protection against accidents on the job, the land, scaffolding, and theft.
  • The policy does not cover war, nuclear hazards, extreme weather, or government seizure.
  • The name of the insured should be the name of the owner of the property and not the contractor.

Obtain insurance to protect the building and save yourself from financial losses.