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Builders risk premium range

Course-of-construction coverage is priced off limit, construction type, term, and hazard zone. This is a planning range so you can put a number in the budget before the first draw.

What builders risk is — and is not

Policy	Covers	Does not cover
Builders risk / course of construction	The structure, materials, and often fixtures against fire, wind, theft, vandalism during the build	Injuries, GC mistakes, flood unless endorsed, homeowners after CO
GC general liability	Third-party injury and property damage from the builder’s operations	The house itself if a storm hits
Worker’s compensation	Injured workers on the job	Your construction loan or the dwelling
Homeowners (HO-3 / HO-5)	The finished house after occupancy	A dwelling still under construction

What the loan commitment will require

Limit at least the completed dwelling / hard-cost budget (often plus 10%)
Term covering the full construction period, with extension language
Lender named as mortgagee / loss payee
You and the GC as insureds, depending on who bought the policy
A plan to bind homeowners (and flood, if mapped) before the perm starts

Who usually buys it

The borrower, so the lender is clearly the mortgagee
Or the GC, with owner and lender as additional insured / loss payee
Do not assume the GC’s GL is builders risk — it is not
Ask the insurance desk before first draw, not after a storm

Watch-outs that stall a draw

Coverage ends at 12 months and the build is at month 14 with no extension.
Limit is the lot value, not the finished house.
Coastal wind / named-storm deductible was never disclosed.
Flood zone but no flood policy — builders risk usually excludes flood.
Materials stored off-site or in a trailer were never scheduled.
Homeowners was not quoted so conversion at CO is a scramble.

Questions for the insurance desk

Is the limit the completed value or current value?: Completed-value forms are what construction lenders expect.
Who is the first named insured?: The person who can file the claim should match the loan docs.
What is the named-storm or wildfire deductible?: A 2–5% deductible on a $1M dwelling is a cash event.
Does the policy extend if the construction term is modified?: Your 12-month policy and 18-month loan should not fight.
When does homeowners bind?: Same day as CO / perm conversion, not a week later.
Is flood excluded?: If you are in a special flood hazard area, budget a separate policy.

Ask about builders risk

Guides

Five things to know before you bind course of construction

Your homeowners policy will not cover a house that does not exist yet

HO-3 and HO-5 attach to a completed dwelling. Course-of-construction coverage is a different product.

A standard homeowners policy assumes walls, a roof, and occupancy. A framed shell, materials on site, and a trailer full of windows are outside that contract. If a storm or theft hits during the build, the homeowners carrier will point at the date of occupancy — and decline.

Builders risk (course of construction) is written for that gap. It insures the structure and often the materials against fire, wind, theft, and vandalism until certificate of occupancy. Then you convert to homeowners, on purpose, the same week the permanent mortgage starts.

Do not let the GC tell you their general liability is “the same thing.” GL covers third-party injury from their operations. It does not rebuild your house.

Who should buy builders risk: you or the contractor

Either can purchase it. The loan docs care who is named, not who wrote the check.

Many borrowers buy the policy so they control the claim and the lender is clearly listed as mortgagee. Many GCs buy a blanket course-of-construction form and add the owner and lender as additional insured or loss payee.

The construction commitment will say which form the lender will accept. If the GC’s policy is a master that expires mid-build, or does not name the mortgagee, first draw will not fund.

Ask for the certificate before closing, not after the foundation inspection. Confirm the term covers the full construction period plus a cushion, and that an extension is available if the loan term is modified.

Limit, term, and named insured — three fields that stall a draw

Under-limit, short-term, and mis-named policies are the most common insurance conditions on construction loans.

The limit should be the completed dwelling / hard-cost budget, often plus 10% for debris and soft costs. Insuring the lot value is not insuring the house.

A 12-month policy on an 18-month construction term is a known miss. The policy and the loan should be able to run the same race, including an extension if weather or inspections slip.

The first named insured should be the person who can file the claim. The lender needs mortgagee / loss payee language that matches the note. Get the endorsement in writing; a verbal “we’ll add them” does not clear underwriting.

Flood, named storm, and wildfire are often not in the base form

Builders risk is not a catastrophe catch-all. Deductibles on wind and fire can be a cash event.

Most course-of-construction policies exclude flood. If the site is in a special flood hazard area, budget a separate flood policy the way you would on a finished house — the lender will.

Coastal wind and named-storm deductibles are frequently 2–5% of the dwelling limit. On a $1 million house that is $20,000–$50,000 out of pocket after a hurricane, not a $2,500 nuisance claim.

Wildfire interface and theft of copper or appliances have their own sublimits. Ask what is scheduled for materials stored off-site or in a container. Unscheduled lumber is how claims get cut in half.

Bind homeowners the week of CO — not the week after

Builders risk ends when the house is occupiable. The permanent mortgage needs a homeowners policy the same day.

The conversion is a date, not a vibe. Certificate of occupancy, perm conversion, and homeowners bind should be the same conversation. A gap of even a few days is an uninsured dwelling sitting on a million-dollar note.

Quote homeowners while the house is still in drywall so the premium is in the DTI you already qualified on. Coastal and high-value dwellings can take weeks to place.

If flood was required during construction, it is required after. Do not drop it because “we’re done building.” The flood map does not care about your punch list.