General contractors take on a lot of responsibility when they win a construction project, whether it is for a home or a skyscraper. If something goes wrong during the course of the project, the contractor can lose income and potentially be at risk of a lawsuit from the property owner.
Thankfully, insurance companies offer a selection of construction insurance policies designed to protect contractors. Perhaps the most important besides general liability coverage is a builder’s risk insurance policy that covers unexpected damage to the property your company is working on.
Find out more about builder’s risk insurance and other types of construction insurance your company may need:
- Best Construction Insurance Companies
- What is Builder’s Risk Insurance?
- What Does Builder’s Risk Insurance Cover?
- Some Other Types of Construction Insurance to Consider
- How Much does Builders Risk Insurance Cost?
- Builder’s Risk VS. General Liability Insurance
- Builder’s Risk VS. Inland Marine Insurance
- What About Construction Bonds?
The 6 Best Construction Insurance Companies
We research more than 20 companies offering builders’ risk insurance and here are our recommendations of the 6 best providers:
- CoverWallet: Best for Getting an Online Quote
- Chubb: Best for Large General Contractors
- Hiscox: Best for Small Contractors
- Nationwide: Best for Comprehensive Builder’s Risk
- Next: Best for Easy Quotes
- The Hartford: Best for Eco-Friendly Contractors
CoverWallet: Best for Getting an Online Quote
If you want to be able to compare multiple quotes at once for construction insurance, then consider going with a digital broker like CoverWallet. This provider offers rates for your desired insurance, including builder’s risk insurance, based on the information you provide online. Sometimes, more complex quotes will require that you call in to speak with an agent. Most insurance quotes can be obtained in just minutes through their online forms.
Chubb: Best for Large General Contractors
Chubb prefers working primarily with big contracting companies that bring in over $30 million in yearly revenue. This insurance provider offers a full range of customizable construction insurance policies, including builder’s risk insurance. With a rank of #3 for customer satisfaction on J.D. Power’s Small Commercial Insurance Study, it’s also a great choice if you want a team that’s dedicated to providing a great experience.
Hiscox: Best for Small Contractors
As a well-established insurance company with more than a century of service to business clients, Hiscox has plenty of experience and a reliable history you can count on. Hiscox caters to small businesses, providing flexible payment plans and personalized customer service. Hiscox doesn’t specifically state that they offer builder’s risk insurance, but they do provide a broad catalog of coverages, like:
- General Liability
- Professional Liability
- Pollution Liability
- Protective Indemnity Coverage
- Defective Design Rectification Coverage
Nationwide: Best for Comprehensive Builder’s Risk
If you are looking for builder’s risk insurance that comes with a number of additional endorsements then consider this nationally known insurance company. Nationwide boasts builder’s risk insurance with all of the traditional coverage, plus options for:
- Building Changes to Suit Local Laws and Regulations
- Local Laws that Increase Repair Costs or Demolition Costs
- Pollutant Cleanup
- Sewer System Backup Remediation & Repair
- Fungal Growth
- Damage to Personal Property
They also provide a full range of other construction insurance options, like general liability. Since they don’t provide online quotes, you’ll need to call and speak with an agent.
Next Insurance: Best for Easy Quotes
If you would like to get through the online quoting process as quickly and easily as possible, consider Next Insurance. They make the process straightforward and simple. Next offers several insurance options for contractors, like:
- General Liability
- Tool & Equipment
- Commercial Auto
- Property Insurance
- Professional Liability
- Workers’ Compensation
However, they don’t appear to offer a builder’s risk policy. You can always get in touch with the company by phone or fill out their online quote form to get your information into their system. It’s possible you may be able to get a bundled policy that covers some of the same issues that builder’s risk covers.
The Hartford: Best for Eco-Friendly Construction
Another well-established company, you can trust The Hartford to have a good handle on all of your insurance needs and then some. The Hartford has underwriters who are dedicated to servicing those in the construction industry. Also, they provide builder’s risk policies with automatic coverage for environmentally related concerns, like:
- Hiring an engineer to supervise changes and repairs to a Green certified building
- Paying recertification fees for a Green building after repairing damage
- Increased limits for contractors who choose to recycle debris rather than send it to a landfill
- Paying for ventilation or flushing out of air systems to improve indoor air quality
- Option of adding vegetative roofing for increased insulation, better rainfall management, and improved air quality
What is Builder’s Risk Insurance?
This is a type of construction insurance that helps cover the costs of property damage to a building in process. For instance, it can protect from financial loss associated with repairing damage to a building that is vandalized, or rebuilding the structure after a fire, or fixing water damage after heavy rains.
Builder’s Risk Insurance will pay for materials, supplies, and equipment needed to fix damage. This type of coverage can also cover:
- Added Interest Payments Due to Delayed Completion of the Project
- Loss of Potential Rental Income
- Loss of a Potential Sale of the Property
- Any Real Estate Taxes that Come Due While the Property is Still in the Investor’s Name
- Debris Removal and Disposal Costs
- Pollution Clean Up, Such as Dealing with Mold after a Hurricane
What Does Builder’s Risk Insurance Cover?
While every policy is different, builder’s risk insurance provides coverage for a number of different events that can damage a building under construction or renovation.
The kinds of events that are covered are usually related to weather and acts of god, like:
- Lightning Storms
- Thefts & Vandalism
Some Other Types of Construction Insurance to Consider
There are many other kinds of construction insurance that a contractor should invest in before beginning a project. Each of these policies provide coverage for specific incidents that may occur. For example, a company backhoe is damaged when the flatbed truck it’s being transported on gets into an accident. Commercial trucking insurance will pay for the damage to the flatbed, while inland marine insurance covers repairs or replacement of the backhoe.
Let’s take a closer look at some of the other types of construction insurance your company should consider:
- Commercial Automotive Insurance: Available for trucks, vans, and sedans, commercial auto insurance provides coverage for damage to your vehicle, other vehicles, and bodily injury.
- General Liability Insurance: A common type of business insurance, this covers third-party damage and third-party bodily injury, such as the client falling on your jobsite and breaking an ankle.
- Contractors’ Professional Liability Insurance: Also known as errors & omissions insurance, this policy covers any mistakes you make or your subcontractors make in the building’s construction.
- Pollution Liability Insurance: Contractors pollution liability coverage protects your business if the work you do results in hazardous materials leaking into the soil or water, exacerbates existing soil contamination, or even causes a moisture leak that results in mold.
- Inland Marine Insurance: Designed for equipment and tools in transport, this insurance covers repairs and replacement of damaged assets.
- Contractor’s Tools & Equipment Insurance: Similar to inland marine insurance, this covers damage to and replacement of mobile tools and equipment worth less than $10,000. It also protects against theft and vandalism of equipment on the jobsite.
- Workers’ Compensation: Required by most states, workers’ compensation covers injuries to your employees while on the job. It pays medical bills, and a portion of missed income while out of work with the injury.
How Much does Builders’ Risk Insurance Cost?
The cost of builders risk insurance varies, depending on several factors such as the size of the building, the location of the building, and builders’ risk profile, and the coverage of the policy.
The average cost of builders risk insurance for small businesses are $110 a month or $1,320 a year.
Below are the average annual cost of other types of insurance a construction company or a construction contractor would need:
- Construction General Liability: $500-$1,500
- Course of Construction Insurance or Builders Risk Insurance: 2-4% of the project cost
- Workers Compensation: $5,000 – $6,000 per employee
- Commercial Auto: $1,000-$3,000 per vehicle
- Inland Marine: $2,000-$3,000
The best way to get the cheapest builders risk insurance is to compare quotes from a few companies or to work with a digital broker like CoverWallet to compare several quotes and select the cheapest one for you.
Builder’s Risk vs. General Liability Insurance
You may be wondering if there is a difference between these two kinds of construction insurance policies: builder’s risk versus general liability. The answer is yes. Both of these types of insurance cover damage caused to a building, but what caused the damage varies.
- General Liability: One feature of general liability insurance is that it protects against damage done to your client’s property or another person’s property by your contractors and subcontractors.
- Builder’s Risk: This insurance covers you against damage done to a building under construction by third-parties, like vandals, by acts of god, like hurricanes, and by unexpected events, like fires or explosions.
Builder’s Risk vs. Inland Marine Insurance
You may also be confused about builder’s risk insurance versus inland marine insurance. Essentially, a builder’s risk policy covers financial costs associated with damage to a building you are working on. Inland marine insurance covers costs associated with your property and equipment that is damaged in transit.
While inland marine insurance would cover the repairs to a backhoe that is blown off a flatbed truck on the highway in a windstorm, it wouldn’t cover damage to your building project from those same high winds. In the latter event, builder’s risk insurance is more likely to kick in and pay for wind damage repairs to your building project.
What About Construction Bonds?
Construction companies will also typically carry surety or performance bonds when working on projects, especially big jobs. These bonds are designed to protect the real estate owner from financial loss in case the contractor can’t finish construction, completes the work poorly, or doesn’t meet the requirements laid out in the contract.
There are also payment bonds that general contractors take out to show that they have the funds necessary to pay all of their contractors and suppliers. Many contractors are required by potential clients to show evidence of both of these bonds during the bidding process.