In one sentence
Coverage for a property under construction, protecting the work in progress against loss.
The longer version
Builder's risk insures the building being built, the materials, and often soft costs, until the project is complete and permanent coverage takes over. It is essential collateral protection during construction.
On construction loans, builder's risk is a closing requirement and a monitored item as the project progresses.
Common questions
- What is builder's risk insurance?
- Property coverage for a building under construction, protecting the work in progress, materials and sometimes soft costs against covered losses.
- Who buys builder's risk insurance?
- The owner or the contractor, depending on the construction contract. Lenders require the lender to be named as mortgagee and loss payee.
- When does builder's risk coverage end?
- Usually at completion or occupancy, when permanent property coverage must be in place without a gap.
Keep reading
- The due diligence checklist, built to be runChecklists as systems, not documents.
- The commercial loan closing checklistWhat goes on the list and who owns each line.
- The commercial loan closing processThe five stages from term sheet to funded.
- Commercial loan softwareWhere this sits in the lending stack.