Builder’s risk insurance cost

Small businesses pay an average premium of $105 per month, or about $1,259 annually, for builder's risk insurance. Most businesses pay around $350 to over $7,000 per year, depending on their unique business risks.

Our figures are calculated using the median cost of policies sold by leading insurance companies to Insureon's small business customers. The median offers a better estimate of what your business is likely to pay because it excludes outlier high and low premiums.

While Insureon's small business customers pay an average of $105 monthly for builder's risk insurance coverage, 49% pay less than $100. Another 26% pay between $100 and $200 per month. Additionally, annual premiums range from about $350 to around $7,000.

The cost depends on the construction project. Policy costs are typically between 1% and 4% of the total completed project value of the structure, which includes construction costs.

Your insurance provider will look at the following when calculating your premium:

• Coverage limits and deductible
• Materials and labor
• Construction types and classifications
• Number of employees
• Location
• Coverage options
• Project cost and length

For building projects that involve expensive construction materials (such as fire-resistive materials) or high labor costs, you would need a builder's risk policy with higher limits. This will increase your premium.

Many builder’s risk policies have multimillion-dollar coverage limits that can, for example, cover $10 million or more of damage per incident.

If you have materials and equipment you bring from one jobsite to another, you may need inland marine insurance, which is also called contractor's tools and equipment coverage.

These policies protect your tools and other property while in transit, which isn't a type of peril covered by builder's risk insurance.

Builder’s risk insurance policies sometimes provide different coverage limits for different construction classifications and construction types. For example, a plan might include a $5 million limit for a frame structure and a $10 million limit for a joisted masonry structure.

Similarly, the size of the construction site could also impact your premium, as the cost of builder's risk insurance for a new build on a residential property would likely be less than coverage for a larger commercial structure with a higher square footage.

You can also add endorsements for optional coverages, such as for a temporary structure, scaffolding, pollutant cleanup, or debris removal after a loss.

It's simple: The more workers you have, the more opportunities there are for incidents (e.g., employee theft) to occur. For this reason, a business with a large number of employees will likely pay more for a builder's risk policy than one with just a few workers doing a small renovation project.

If an employee is injured on the job, builder's risk insurance typically doesn't cover their medical bills or legal expenses. Instead, you'd need workers' compensation insurance.

The location of a construction project can significantly impact the premium you pay. For example, jobsites located in areas with higher crime rates or at an elevated risk of natural disaster may have to pay higher premiums than those located in areas where these occurrences are lower.

For instance, small business owners in Florida, Texas, or other coastal areas may have a higher cost for a builder's risk insurance policy than those taking on projects in Colorado due to the seasonal on-site risk of hurricane damage, flood damage, or other storm damage. Another example would be areas that suffer from earthquakes and wildfires, like California.

While builder's risk premiums may fluctuate based on where a project is located, it could still save you in the long run should any damage occur to your structure or building materials due to a covered event.

The total project cost is often a major factor when it comes to builder's risk insurance. Typically, the insurance cost is between 1% and 4% of the total project. 

Additionally, how long your project takes can impact your insurance premiums. For example, a real estate developer commissioning a large apartment complex will likely pay more than a single homeowner paying for one remodeling project.

There are several things you can do to keep your builder's risk coverage costs low and stay in your construction budget.

Some strategies include:

Insurance companies usually let you choose between an annual payment or smaller monthly payments, with a discount for the annual payment.

Some businesses reduce their 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 types of contractors who handle a continuous stream of projects.

Make sure you're the one responsible for buying a builder's risk policy. If the property owner or project owner already has this policy, contractors and subcontractors can likely get included as an additional insured.

Claims on your insurance can increase your premium.

Construction businesses can manage risk by carefully reviewing blueprints, documenting any structural changes during a project, and following quality control procedures to reduce the risk of faulty workmanship. Regular maintenance of tools and machinery can also help prevent equipment breakdowns that lead to delays and unexpected expenses.

Strong risk management practices can help contractors avoid claims involving property damage, foundation issues, project delays, and related soft costs, such as additional financing, administrative, and project management expenses.

By reducing risks and preventing accidents, you can lower the chance of costly claims and help keep your insurance costs down.

Insureon is the #1 independent agency for online delivery of small business insurance. We help business owners compare quotes from top-rated providers, buy policies, and manage their different types of coverage online.

By completing Insureon’s easy online application today, you can compare free quotes for builder's risk insurance and other types of property insurance from leading insurance companies. Insureon insurance agents are available to help answer any questions and provide guidance about your coverage needs.

Once you find the right coverage for your small business, you can begin coverage in less than 24 hours and get a certificate of insurance for your small business.