Standard homeowners policies cover a completed, occupied dwelling. When a client is building a new home or doing a major renovation, there may be little to no coverage for the structure during the build period.
Standard homeowners policies cover a completed, occupied dwelling. They are not designed for a structure under active construction or a major gut renovation. When a client is building a new home, adding a significant addition, or undertaking a full renovation, the standard policy may offer little to no coverage for the structure during the build period.
Builders risk insurance — sometimes called course of construction coverage — fills this gap. It covers the structure itself and, depending on the policy, materials on-site or in transit, against damage from fire, wind, theft, vandalism, and other covered perils during the construction period.
Who Needs It
The most obvious case is new construction: a client building a home from the ground up has no existing homeowners policy to extend. The land is owned, the financing is in place, and work is beginning — but nothing is covered until a builders risk policy is bound.
Existing homeowners doing major renovations also face a gap. A standard homeowners policy may exclude damage to portions of a home under active renovation, particularly if the home is unoccupied during the work. A modest addition is different from a full gut renovation that leaves the structure open to the elements for months.
What It Covers
Builders risk policies cover the structure as it is being built — including foundation, framing, roofing, and built-in fixtures — typically for the duration of the project plus a short buffer period. Coverage usually includes damage from fire, wind, hail, lightning, and vandalism, as well as theft of materials that are part of the structure and materials stored on-site awaiting installation.
What it typically does not cover: tools and equipment belonging to the contractor (those fall under the contractor's own inland marine or equipment floater), employee theft, or mechanical breakdown.
Who Holds the Policy
The property owner typically purchases builders risk coverage, though general contractors sometimes carry it and pass the cost to the client. Either way, the agent's role is to confirm coverage is in place before work begins — not after a loss.
Lenders financing new construction often require it. But for clients paying cash or working with smaller contractors, no one may require it — which is exactly when it gets skipped.
The Transition
Once the project is substantially complete and the home is ready for occupancy, builders risk coverage ends and a standard homeowners policy takes over. That transition needs to be managed deliberately. Gaps in coverage at that handoff are worth watching.
For any client who mentions new construction, a major addition, or a full renovation, builders risk should come up early in the conversation — not as an afterthought once the framing is already underway.