The cost of builder’s risk insurance is based on the total completed value of your structure. That includes the cost of all materials and labor, but excludes land value. This policy is also called course of construction insurance.
The median cost of builder’s risk insurance is $95 per month, or $1,140 annually, for Insureon's small business customers. The median cost offers a more accurate estimate of what your business is likely to pay than the average cost of builder's risk insurance because it excludes outlier high and low premiums.
Many small business owners (38%) pay less than $1,000 per year for builder's risk insurance, and 40% pay between $1,000 and $2,000 per year. The cost depends on the construction project. Policy costs are typically between 1% and 4% of the total completed value of the structure, which includes construction costs.
Builder’s risk insurance comes in a wide range of coverage limits. Higher limits cost more, but cover more expensive claims. The median limit for Insureon customers who buy a builder's risk policy is $460,000, with no deductible.
Builder's risk insurance covers incidents such as vandalism or theft of building materials at a construction site, up to the policy limits. For example, this policy covers costs if a storm causes water damage to the existing structure, or a fire on a job site destroys a pile of lumber.
For building projects that involve expensive construction materials or high labor costs, you should consider a policy with higher limits. Many builder’s risk policies have multimillion dollar coverage limits that can, for example, cover $10 million or more of damage per incident.
Builder’s risk insurance policies sometimes provide different coverage limits for different construction classifications. For example, a plan might include a $5 million limit for a frame structure and a $10 million limit for a joisted masonry structure.
You can also add coverage extensions, such as coverage for a temporary structure or debris removal after a loss. Contact an insurance agent if you're unsure what type of coverage you need.
Some businesses reduce their monthly or annual builder’s risk insurance costs by purchasing a master policy that provides continuous coverage without an expiration date. These plans are ideal for general contractors and other contractors who handle a continuous stream of projects.
Another way to save money is to pay the annual premium upfront. Insurance companies usually let you choose between an annual payment or smaller monthly payments, with a discount for the annual payment.
Finally, make sure you're the one responsible for buying builder's risk insurance. If the property owner or developer already has this policy, contractors and subcontractors can likely get included as a named insured.
The right type of policy can save you money in the long run. Other coverage options include a general liability policy for financial protection against third-party bodily injuries and property damage, and professional liability coverage for protection against lawsuits related to your work performance.
View our recommended policies for construction businesses and contractors.