Do I Need Builders Risk Insurance for My Home Renovation or Rehab Project?

Nate Jones, CPCU, ARM, CLCS, AU
1 day ago
2 min read

Renovating or rehabbing your home is exciting—but also risky. Fires, water damage, theft of materials, and other accidents can derail your project and result in significant financial loss. Builders risk insurance is designed to protect property owners during construction or renovation and is often overlooked.

If you’re investing time and money into a home renovation or rehab, here’s what you need to know about builders risk coverage.

What Builders Risk Insurance Covers

Builders risk insurance protects the home under construction or renovation and often includes:

Property coverage: Protects the structure from fire, wind, vandalism, and lightning
Materials and equipment coverage: Protects supplies on-site or in transit
Temporary structures: Garages, sheds, or scaffolding may also be covered
Optional endorsements: Flood, earthquake, soft costs, or extended coverage for delays

For more details on coverage basics, see the Insurance Information Institute.

Why Homeowners Often Need Builders Risk Insurance

Even if you already have homeowners insurance, your policy likely does not cover major renovations or rehabs. Builders risk insurance is specifically designed for:

Large-scale remodeling projects
Home additions or structural changes
Rehab of older or damaged properties
Projects requiring significant materials or labor investment

Renovation projects can expose your home to risks that standard homeowners insurance excludes, such as theft of construction materials, contractor errors, or fire during construction.

How to Determine If You Need Builders Risk Coverage

Consider these questions:

Will the renovation involve structural changes or additions?
Are you storing valuable materials on-site?
Does the project involve multiple contractors or subcontractors?
Are you financing the project through a lender that requires insurance?

If the answer is yes to any of these, builders risk insurance may be essential.

Duration and Limits of Coverage

Builders risk insurance is typically temporary, covering the property until the project is complete or the home is occupied.

Key considerations:

Coverage limits should reflect the total project cost, including labor and materials
Optional endorsements can increase limits for soft costs, delays, or natural disasters
Policies generally require a start and end date for the coverage term