What type of insurance policy is necessary for a building under construction?

A builders risk policy is specifically designed to provide coverage for buildings that are under construction. This type of insurance protects against loss or damage to the building and its materials during the construction period. It typically covers risks such as vandalism, theft, fire, and certain weather events that can occur before the building is complete.

The reason a builders risk policy is essential during construction is that a standard commercial property policy usually does not cover structures that are not yet completed or are in the process of being built. Additionally, while general liability insurance protects the builder against third-party claims for bodily injury or property damage, and workers compensation provides coverage for worker injuries, these policies do not provide the specific coverage needed for the physical loss or damage of the construction project itself. Therefore, having a builders risk policy ensures that the financial investment in the construction is safeguarded against potential risks that are common during the building process.