Who buys builders risk insurance, the owner or the GC?

Your contract should say. Either can buy it, but someone has to, and the named insureds and waivers need to match how the job is structured.

Does general liability or a regular property policy cover a building under construction?

Usually not the way you need. GL is for liability to others. A finished-building property policy is a poor fit for materials in transit or off site, rising values, and construction-specific risks like collapse.

What is delayed opening or soft costs coverage?

It can pay lost rents or revenue, extra loan interest, and similar costs when a covered property loss pushes back your opening date. It does not cover ordinary schedule delays like bad weather.

Why name every contractor and add a waiver of subrogation?

So the carrier cannot sue a contractor after paying a claim. That keeps a property loss from turning into a fight between the owner, GC, and subs.

Builders Risk Insurance: The Foundation Every Construction Project Needs

By Lacey Riger, Director, Serhey Davidson Corp.

When contractors and developers think about insurance, general liability usually comes to mind first. But on any construction project, the policy that protects the building itself while it goes up may matter even more. That policy is builders risk. If it's set up poorly, a single property loss can turn into a lawsuit between the owner, the GC and the subs, and the whole insurance program can fall apart around it. That matters especially on New York jobs, where owner, GC and sub contracts and material schedules get messy fast.

Why a regular property policy won't do the job

A building under construction is a very different risk from a finished one. It's more exposed to wind, rain and fire. It starts out worth very little and grows in value every day, sometimes past the original budget. Materials may belong to the owner, the GC or a sub, and they may be sitting on site, in a warehouse or on a truck.

A standard commercial property policy isn't designed for any of that. It usually won't cover materials in transit or stored off site, its limits may be shared with the owner's existing buildings, and it tends to have more exclusions. There's also a hidden cost. A big construction loss on the owner's permanent property program can raise their premiums for years and sour the relationship with the contractor who caused it.

Builders risk is written as a specialized inland marine policy built for construction. It covers materials on site, in transit and in storage, and it can address construction-specific risks like collapse. Because it's separate from the owner's regular property program, a claim won't follow them into future renewals.

What to get right

Decide who buys it. Your contract should say clearly whether the owner or the GC buys the policy.
Name every contractor as an insured and include a waiver of subrogation. This stops the carrier from suing a contractor after it pays a claim, which avoids a lot of expensive fighting.
Read the form itself. Most carriers write their own builders risk forms, and they vary a lot. Look closely at what's covered, what's excluded, and how flood, earthquake, collapse and construction defect are handled.
Choose replacement cost. It's widely available and usually costs no more than actual cash value.

Think about installation floaters. Subs installing high-value equipment may need their own floater, especially if there's no broad builders risk policy on the job.

Don't forget delay coverage

A fire or windstorm doesn't just damage the building. It pushes back your opening date, and that delay has a price. Delayed opening coverage, sometimes called soft costs coverage, can pay for lost rents or revenue, extra loan interest, extra real estate taxes and similar costs caused by a covered loss. It won't respond to ordinary delays like bad weather. Check how your policy defines hard and soft costs so your limits are set correctly.

Frequently Asked Questions

Who buys builders risk insurance, the owner or the GC?: Your contract should say. Either can buy it, but someone has to, and the named insureds and waivers need to match how the job is structured.
Does general liability or a regular property policy cover a building under construction?: Usually not the way you need. GL is for liability to others. A finished-building property policy is a poor fit for materials in transit or off site, rising values, and construction-specific risks like collapse.
What is delayed opening or soft costs coverage?: It can pay lost rents or revenue, extra loan interest, and similar costs when a covered property loss pushes back your opening date. It does not cover ordinary schedule delays like bad weather.
Why name every contractor and add a waiver of subrogation?: So the carrier cannot sue a contractor after paying a claim. That keeps a property loss from turning into a fight between the owner, GC, and subs.

How we can help

At Serhey Davidson, we've been insuring New York construction since 1947. We work with contractors, subcontractors and developers on ground-up construction, renovations and multifamily projects, and we know which carriers write these risks well. If you have a project coming up, or you want a second set of eyes on your current builders risk policy or contract language, we'd be glad to help.

Use the quote form at the bottom of this page, email team@serheydavidson.com, or call 212-964-7802.

Lacey Riger

Director

Serhey Davidson Corp.

Insurance Brokers & Bonding