When do Homeowners Need Builder’s Risk?

Are your clients fixing up their current home or adding a new room? Or maybe they are having a new house built? Whatever type of construction work they have planned, they would benefit considerably from having New York Builder’s Risk Insurance.

Builder’s risk insurance protects against theft or damage during every stage of the construction project. With this type of insurance, your clients can minimize financial losses if any untoward incident occurs before the project is completed.

Why do homeowners need builder’s risk insurance?

Building or renovating a home can be a complex process, with detailed steps and tricky decisions to be made along the way. From choosing the right piece of property to planning and designing the structure, hiring a contractor, and financing the project, there are numerous factors to consider and many things that could go wrong.

And then, there are external factors. Theft and vandalism are concerns that all homeowners face, even before the home is completed. Environmental conditions are another concern, with fire, flood, wind, storms, and even lightning possibly putting the project at risk.

Builder’s risk insurance protects homeowners from these and other issues that may occur during the construction project. They offer more specialized protection than different types of insurance available to homeowners.

Builder’s risk insurance is sometimes used to supplement existing insurance policies. For example, homeowners that already have property insurance could add on builder’s risk coverage to their current policy. This saves them the hassle and expense of obtaining a second line of insurance while still benefiting from the added protection that builder’s risk insurance provides.

Builder’s risk insurance coverage

Builder’s risk insurance covers a wide range of incidents, including natural events, environmental conditions, and even damage caused by humans. Among these are:

  • Wind
  • Fire
  • Lightning
  • Hail
  • Theft
  • Vandalism
  • Explosions

Insurance firms typically offer builder’s risk insurance for the following structures and construction items:

  • Homes, buildings, or other structures currently under construction
  • Scaffolding, fences, and other temporary structures
  • Building materials
  • Property and building materials that are being transported

In addition, some firms provide coverage for soft costs and general liability.

Builder’s risk insurance vs. homeowners’ insurance

Homeowners’ insurance provides similar protection as builder’s risk insurance, which is why they are often confused with one another.

When building a home, home insurance might seem like the right option, when builder’s risk insurance would be more appropriate. Homeowners planning a renovation project may think that their existing home insurance policy provides sufficient coverage against incidents that builder’s risk insurance typically covers.

But the most crucial difference is that homeowners’ insurance is meant specifically for completed structures. Builder’s risk insurance, on the other hand, is intended for homes that are still under construction.

Why the distinction? Because homes still undergoing construction are subject to different risks than fully completed structures. For example, the foundation is more likely to incur damage during a storm because there is no overhead structure to protect it. And because the house is likely unoccupied, there is more risk of theft and vandalism than with a finished home. This is why buildings under construction need the specialized coverage that builder’s risk insurance provides.

Another important distinction is the type of coverage provided. Standard homeowners’ insurance usually covers the owners’ personal belongings, the structure, personal liability, and loss of use. On the other hand, builder’s risk insurance covers only the home being constructed and the building materials used.

Homeowners building a new home or renovating their existing property usually don’t need the type of coverage provided by standard homeowners’ insurance. Opting for builder’s risk insurance gives them precisely the kind of coverage they need, and they are spared unnecessary costs in the process.

Cost of builder’s risk insurance

The cost of builder’s risk insurance depends on many factors, including the specifics of the construction and the risks associated with the location and property. Among the factors that have the most effect on builder’s risk insurance cost are:

  • Location
  • The type of project
  • The materials used
  • Project duration

Keep in mind also that the cost of builder’s risk insurance may increase as the project progresses. Because there isn’t much to insure initially, insurance may be considerably cheaper when starting the project than when it is nearing completion.


Builder’s risk insurance protects your clients against risks that aren’t covered by standard homeowners’ insurance. Whether they are building a new house or remodeling their current residence, this type of insurance will provide essential coverage throughout the entire construction project.

About Snyder Specialty

Snyder Specialty, LLC is a New York-based underwriting facility that provides a range of property and liability solutions for personal and commercial lines. Specializing in coastal properties and hard-to-place risks, Snyder Specialty expands your current capabilities with proven solutions for complex risks. Find out more about the company’s range of services by calling (718) 362-8039.