Question 1

Who buys the builders risk — owner or general contractor?

Accepted Answer

Either can — it depends on the construction contract. Owner-purchased policies (most common on commercial and multifamily projects) typically name the GC and major subs as additional insureds. Contractor-purchased policies are common on residential and smaller commercial projects. The contract should explicitly state who buys, what limits are required, what the deductible structure is, and how a loss is allocated between parties. Ambiguity here causes disputes when claims occur.

Question 2

When does builders risk end?

Accepted Answer

Standard policies terminate at the earliest of: completion of construction, first occupancy or beneficial use of the property, sale of the property, or the policy expiration date. The 'first occupancy' trigger surprises owners — moving furniture in, holding open houses, or starting tenant move-in can end coverage even before construction is fully complete. The transition to standard commercial property or homeowners coverage needs to be coordinated to avoid gaps.

Question 3

Are materials in transit covered?

Accepted Answer

Yes, most builders risk policies include transit coverage for materials being delivered to the project site, with limits typically capped at $250K–$500K per shipment. Coverage usually begins when materials leave the supplier and ends at delivery to the site. Materials stored at off-site warehouses or staging areas are sometimes included, sometimes excluded — depends on the policy and any required schedule of off-site locations.

Question 4

Does builders risk cover existing structures during renovation?

Accepted Answer

Standard builders risk only covers the new construction or addition. The existing structure is the owner's responsibility under their commercial property or homeowners policy, which often requires endorsement or notification when renovation is ongoing (renovations frequently void or modify existing property coverage). Some renovation-focused builders risk policies include 'existing structure' endorsements that fold the existing building into the construction-period coverage — useful when the building is significantly altered.

Question 5

What about soft costs and lost rents?

Accepted Answer

Standard builders risk covers physical damage but not the soft costs of construction delay — additional interest on the construction loan, extended permit fees, design and consulting fees, and lost rents the owner expected. Soft cost endorsements (often capped at $250K–$1M) cover those delay-related expenses up to a sublimit and a delay deductible (usually 30 days). On a hurricane-delayed Florida project, soft cost coverage frequently exceeds the actual physical damage in claim value.

Question 6

Is theft covered on builders risk?

Accepted Answer

Yes, theft is a covered peril on most builders risk policies, and it's frequently the top claim driver in Florida. Coverage typically requires 'reasonable safeguards' — site fencing, lighting, lockable storage, and sometimes after-hours security on larger projects. Carriers may impose theft sublimits (especially for copper and appliances) and may exclude theft of inadequately secured materials. Documentation of materials on site at time of loss is essential to claim payment.

Question 7

How are builders risk premiums calculated?

Accepted Answer

Premium = total project value × rate (driven by construction class — frame is highest, masonry/non-combustible is lower) × duration of construction × Florida wind exposure × deductible structure. Coastal Florida projects can run 0.50%–1.50% of project value annually for high-risk classes. Reporting-form policies for active builders amortize across multiple projects and often produce lower per-project costs than single-project policies. Project location and storm season exposure dominate Florida pricing.

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