What Is Builder's Risk Insurance?
By JC Pacific Corp Published 2026-09-01 Last professionally reviewed: September 2026
Builder's risk insurance, also called course-of-construction coverage, is property insurance designed to protect a building and certain construction materials while work is underway. It does not replace general liability, workers' compensation, or contractor licensing.
What may builder's risk cover?
Depending on the form:
- The structure under construction
- Materials onsite
- Materials in transit
- Temporary structures
- Theft
- Fire
- Vandalism
- Certain weather damage
- Debris removal
- Soft costs or delay expenses by endorsement
Who should purchase the policy?
The construction contract should identify responsibility. Possible policyholders include:
- Property owner
- Developer
- General contractor
- Lender
- Multiple parties as named insureds
Do not assume another party purchased adequate coverage.
When does coverage end?
Coverage may terminate upon:
- Project completion
- Occupancy
- Sale
- Abandonment
- Expiration
- A specified number of days after completion
- Conversion to permanent insurance
Occupying the property too early can create a coverage issue.
Frequently Asked Questions
Does builder's risk cover faulty workmanship?
The cost of correcting defective work may be excluded, although resulting damage can be treated differently depending on the policy.
Does it include contractor liability?
No. That requires separate coverage.
Does it cover earthquake or flood?
Not automatically. Endorsements or separate policies may be required.
Educational information
This content is for general educational purposes and is not insurance, legal, tax, financial, investment, property-management, engineering, or risk-management advice. Insurance policies, eligibility, premiums, deductibles, limits, exclusions, vacancy provisions, occupancy classifications, and underwriting rules vary. California rental and short-term-rental laws also vary by jurisdiction and change frequently. Property owners should consult appropriately licensed insurance, legal, tax, real estate, and property-management professionals regarding their specific property and circumstances.
Coordinate builder's risk, liability, contractor, lender, and permanent-property coverage so no gap exists during construction or occupancy.
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A note on legal advice: These guides provide general, educational information about California real estate practice. They are not legal advice and do not create an attorney-client relationship. Mortgage information is general education, not individualized lending, tax or legal guidance. For advice about your specific offer, contract, closing or financing, consult a qualified California real estate attorney and a qualified mortgage professional.
A note on these California landlord and rental-property insurance guides: These articles provide general, educational information about insurance for owner-occupied and tenant-occupied California residential property. They are not an insurance policy, a quote, a binder, a coverage determination, or a guarantee that any property can be insured or that a carrier will renew. Landlord insurance does not insure a tenant's belongings, loss-of-rent coverage generally applies after a covered physical loss rather than ordinary nonpayment, and an LLC, trust, or other entity structure does not replace insurance or eliminate personal liability. Occupancy is one of the most important facts an insurer evaluates, vacancy can restrict or limit coverage, and platform host protection (such as Airbnb AirCover or Vrbo) is not a substitute for a property-specific policy. No article quotes a premium, discount, deductible, limit, waiting period, or eligibility rule, and none describes a real estate professional as an insurance agent, broker, adjuster, attorney, or coverage expert. Property DNA is only one supporting research service and is never a substitute for insurance underwriting, property inspections, title review, legal advice, lease review, public records, appraisals, engineering evaluations, or professional risk analysis. Time-sensitive products, eligibility rules, limits, landlord laws, short-term-rental rules, platform programs, and local requirements must be reviewed against current official sources at publication time. For a specific property, direct underwriting and coverage questions to a California-licensed insurance professional, and legal, tax, and property-management questions to the appropriately licensed professionals.