Who Should Carry Builder’s Risk Insurance—Owner, Builder, or Contractor?
Construction projects are exciting—but they also come with risk. From new builds to renovations, a lot can happen between groundbreaking and completion. Materials are delivered, structures are exposed, and multiple parties are involved. Builder’s Risk insurance exists to protect projects during this vulnerable phase, but one question comes up often:
Who should carry Builder’s Risk insurance—the owner, the builder, or the contractor?
The answer depends on the project, the contracts, and who has the most at stake.
What Is Builder’s Risk Insurance?
Builder’s Risk insurance is a specialized type of property insurance designed to cover buildings and structures while they are under construction. It typically protects against losses caused by fire, theft, vandalism, wind, and other covered perils during the course of the project.
This coverage usually applies from the start of construction until the project is completed or occupied.
Why Builder’s Risk Matters
During construction, a standard property or commercial policy often won’t fully apply. The structure may not yet qualify as a completed building, and materials may be exposed or stored on-site. Builder’s Risk fills that gap, protecting the investment while work is underway.
Without it, a single loss could delay the project, increase costs, or create disputes between parties.
When the Owner Carries Builder’s Risk
Property owners often carry Builder’s Risk insurance when they are financing the project or have the greatest financial interest in the completed structure. This is common for commercial developments, custom homes, or large renovations.
When the owner carries the policy, it helps ensure continuity of coverage and avoids confusion about who is responsible for insuring the project.
When the Builder or General Contractor Carries It
In some cases, the builder or general contractor may purchase Builder’s Risk insurance—especially when it’s specified in the construction contract. Contractors who manage multiple projects may already have relationships with insurers and prefer to control coverage.
This approach can streamline project management, but it’s important that the policy clearly names all involved parties as insureds.
What About Subcontractors?
Subcontractors typically do not carry Builder’s Risk insurance for the entire project. Instead, they rely on the Builder’s Risk policy held by the owner or general contractor while maintaining their own general liability and workers’ compensation coverage.
Clear communication is essential so everyone understands what is—and isn’t—covered.
The Role of Contracts
Construction contracts play a major role in determining who should carry Builder’s Risk insurance. Contracts often specify responsibility, coverage limits, deductible obligations, and who must be listed as insureds.
Reviewing contracts carefully before construction begins can prevent costly disputes later.
Key Factors to Consider
Who owns the materials on-site?
Who would suffer the biggest loss if damage occurs?
What does the financing or lender require?
Who is contractually obligated to insure the project?
Answering these questions helps clarify who should carry the coverage.
One Policy, Shared Protection
Regardless of who purchases the policy, Builder’s Risk insurance is designed to protect the project itself—not individual liability—and helps keep work moving forward after a covered loss.
Final Thoughts
There’s no one-size-fits-all answer to who should carry Builder’s Risk insurance. In many cases, it’s the owner. In others, it may be the builder or contractor. What matters most is that the project is properly insured, responsibilities are clearly defined, and coverage matches the scope of work.
Builder’s Risk insurance isn’t just about protecting materials and structures—it’s about protecting timelines, investments, and peace of mind.
