Builders Risk

Builder's risk insurance is crucial in California due to the state's unique construction risks, high property values, and frequent exposure to natural disasters (earthquakes, wildfires, floods, etc.). Here’s a breakdown of its importance:

1. Protection Against Construction Site Risks

Builder’s risk insurance (also called course of construction insurance) covers damage or loss to buildings under construction. It protects against:

• Fire
  
  

• Theft
  
  

• Vandalism
  
  

• Wind
  
  

• Lightning
  
  

• Some types of water damage
  
  

• Materials in transit or storage (in many cases)
  
  

In California, these risks are heightened due to:

• Urban development in high-risk wildfire zones
  
  

• Dense population centers (more potential for theft or vandalism)
  
  

• Earthquake exposure in certain regions (can be added via endorsements)
  
  

2. Often Required by Contracts or Lenders

Many lenders, project owners, and municipalities in California require builder’s risk coverage before work begins. If you don’t have it, you might:

• Lose the job
  
  

• Fail to secure financing
  
  

• Violate permit or contractual obligations
  
  

3. Protects Investment in Materials and Labor

Construction projects involve major upfront costs for materials and labor. If a fire, theft, or accident destroys partially completed work, builder’s risk helps:

• Pay for repairs or rebuilding
  
  

• Replace stolen or damaged materials
  
  

• Keep the project on schedule and budget
  
  

Without it, you could be forced to pay out-of-pocket or delay the project.

 4. Covers a Range of Stakeholders

Builder’s risk policies can be structured to cover:

• Property owners
  
  

• General contractors
  
  

• Subcontractors
  
  

• Architects and engineers (in some cases)
  
  

This shared protection gives peace of mind to everyone involved in the project.

5. Reduces Legal and Financial Exposure

In a construction loss scenario, having builder’s risk insurance can:

• Avoid lawsuits between project partners
  
  

• Speed up recovery
  
  

• Minimize project downtime
  
  

In our state of California — where delays and lawsuits are common in construction — this is essential.

Having proper coverage protects your project, your finances, and your reputation.