Builders Risk Insurance: What Subcontractors Should Verify Before Signing
Builders risk covers the project itself while it's under construction. Who buys it, what it excludes, and whether your work is protected are subcontract questions worth answering before the first delivery.
Key takeaways
- Builders risk insures the work-in-progress against physical loss (fire, wind, theft, water) — distinct from the liability coverage in a CGL policy.
- The subcontract should state who procures builders risk (usually the owner or GC) and that subcontractors are insureds or covered for their work.
- Verify whether materials stored off-site and in transit are covered — a common and costly gap.
- Check the deductible and who bears it; subcontracts sometimes pass a large builders-risk deductible down to the responsible trade.
- A waiver of subrogation tied to the builders-risk policy prevents the insurer from suing the trades after it pays a claim — confirm it's mutual.
- Builders risk typically ends at substantial completion or occupancy; know when coverage stops relative to your scope.
What builders risk does — and doesn't — cover
Builders risk (sometimes called course-of-construction insurance) protects the physical project while it is being built: the structure, the materials, and often the equipment, against perils like fire, windstorm, theft, and water damage. It is first-party property coverage on the work itself. It is not liability coverage — a commercial general liability policy responds when your work injures a person or damages other property, while builders risk responds when the project under construction is itself damaged.
Because the two cover different risks, a subcontractor needs to understand both: the CGL it carries, and the builders-risk policy that protects the project it is helping to build.
Who buys it and who's covered
On most projects the owner or general contractor procures a single builders-risk policy covering the whole project, which is more efficient than each trade insuring its own work. The subcontract should say so — and, critically, should confirm that subcontractors are named insureds or that their work is covered under that policy. If the contract is silent, a subcontractor can be left assuming it is protected when it is not.
Equally important is what the policy reaches. Materials stored off-site, in a fabrication shop, or in transit to the project are frequent coverage gaps; a high-value fabricated assembly destroyed before it reaches the site may not be covered unless the policy expressly extends there.
Deductibles, subrogation, and when coverage ends
Builders-risk deductibles can be substantial, and subcontracts sometimes assign the deductible to whichever trade caused the loss. Read for that allocation; a five- or six-figure deductible passed down on a covered claim can dwarf the premium savings of a shared policy. Confirm also that the policy includes a waiver of subrogation in favor of the trades, so the insurer cannot turn around and sue the subcontractor after paying the owner's claim — and that the waiver is mutual.
Finally, note the end date. Coverage usually terminates at substantial completion, owner occupancy, or a set date, whichever comes first. If your scope includes punch-list or post-occupancy work, your activities may fall outside the builders-risk window.
At contract review
Confirm who procures builders risk, that your work and your stored and in-transit materials are covered, what deductible applies and who bears it, and that a mutual waiver of subrogation is in place. Reconcile the policy's end date against your schedule so late-finishing work is not left uninsured.
These are concrete, checkable items a review should surface from the insurance article and the flow-down provisions — so your team verifies the project itself is insured for your work before materials start arriving.
This article is general information about construction contracting and law, not legal advice. Construction law varies significantly by jurisdiction and project. Consult qualified counsel about your specific contract and circumstances.
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