Builder’s Risk Insurance in Michigan: Coverage and Requirements
- 2 days ago
- 5 min read
If you’re starting a construction project in Michigan, you’ve probably already realized something quickly: things can go wrong fast. Weather delays, theft, fire, or accidental damage can all derail a build and drain your budget. That’s where Builder’s Risk Insurance in Michigan comes in, helping protect your project while it’s under construction.
In this guide, we’ll break down what builder’s risk insurance coverage in Michigan typically includes, who needs it, and what requirements contractors and property owners should expect.
What Is Builder’s Risk Insurance in Michigan?
Builder’s Risk Insurance in Michigan is a type of property insurance designed to protect buildings while they are being constructed or renovated. It usually covers the structure during the “build phase,” not after completion.
Think of it as temporary protection for a project that isn’t finished yet. Once the building is completed and occupied, a standard property insurance policy typically takes over.
This type of coverage is commonly used by:
General contractors
Property owners
Developers
Remodelers working on major renovations
What Does Builder’s Risk Insurance Typically Cover?
Core coverage protections
Most builder’s risk insurance policies in Michigan may cover damage to the structure caused by specific events such as:
Fire or lightning damage
Theft or vandalism of materials
Wind or hail damage (important in Michigan weather)
Explosions or certain accidental losses
Damage from construction-related incidents
It often applies to:
The building under construction
Materials and supplies on-site
Sometimes materials in transit or temporarily stored off-site
What is usually NOT covered?
Builder’s risk insurance is not a “catch-all” policy. It typically does not include:
Employee injuries (that falls under workers’ compensation)
Contractor liability for injuries or property damage to others (general liability insurance handles that)
Faulty workmanship or design errors
Wear and tear or normal deterioration
In other words, it protects the project itself—not every possible business risk around it.
Who Needs Builder’s Risk Insurance in Michigan?
In most construction projects, someone needs to carry the policy before work begins. The contract usually decides who—either the property owner or the general contractor.
You likely need builder’s risk insurance if you are:
Building a new home or commercial property
Renovating a structure costing a significant amount
Acting as a general contractor overseeing construction
A developer financing a construction project
Even if it’s not strictly required by law in every case, lenders or project agreements often require it before funding begins.
Builder’s Risk Insurance Requirements in Michigan
There is no single statewide rule in Michigan that forces every project to carry builder’s risk insurance. However, requirements still show up in real life in a few common ways.
Lender requirements
If you are financing construction through a bank or lender, they will almost always require builder’s risk insurance coverage in Michigan before releasing funds. This protects their investment in case the project is damaged or destroyed.
Contract requirements
Construction contracts often specify:
Who must purchase the policy
Minimum coverage limits
Whether soft costs are included (like permits or architectural fees)
Duration of coverage
Local building and permit expectations
While Michigan building codes don’t always mandate this coverage, some municipalities or large commercial projects may require proof of insurance before issuing permits or approvals.
What Affects the Cost of Builder’s Risk Insurance in Michigan?
There is no flat price for builder’s risk insurance. Costs vary widely based on the project. Many small to mid-size projects may see premiums calculated as a percentage of total construction value.
Common factors that affect pricing include:
Total project value
Type of construction (residential vs commercial)
Location within Michigan
Length of the project
Materials used (wood-frame vs steel, for example)
Security measures on-site
For example, a small residential renovation will typically cost far less to insure than a multi-story commercial build. Every project is different, which is why agents usually review details before quoting.
Residential vs Commercial Builder’s Risk Insurance in Michigan
Residential projects
Residential builder’s risk insurance usually covers:
Single-family homes
Home additions
Major remodels
These policies are often simpler and lower in value, but still important due to risks like fire or storm damage.
Commercial projects
Commercial builder’s risk insurance in Michigan tends to involve:
Larger construction budgets
More complex materials and timelines
Higher risk exposure
These policies often require more customization, especially when multiple contractors or phases are involved.
How Long Does Builder’s Risk Coverage Last?
Builder’s risk insurance is temporary. It typically lasts for the duration of the construction project, such as:
Until the project is completed
Until the property is sold or occupied
Or until the policy term expires (often renewable if delays occur)
If construction takes longer than expected—which, let’s be honest, happens often—the policy may need to be extended.
Why Builder’s Risk Insurance Matters in Michigan
Michigan construction projects face unique risks, including:
Heavy snow and ice in winter
Strong windstorms
Seasonal flooding in some regions
Theft of building materials from job sites
Without coverage, one major incident could cause serious financial setbacks. Builder’s risk insurance helps reduce that exposure so projects can continue moving forward.
It also gives peace of mind to everyone involved—owners, contractors, lenders, and subcontractors.
Builder’s Risk Insurance in Michigan Explained
Builder’s Risk Insurance in Michigan is a temporary insurance policy that protects a construction project while it is being built or renovated. It typically covers the structure, materials, and supplies against risks like fire, theft, vandalism, and certain weather damage.
It is not always legally required, but it is commonly required by lenders and construction contracts. Coverage usually lasts until the project is completed or occupied, and the cost varies based on project size, type, and duration.
External Resources
For additional general information about construction insurance and property coverage:
https://www.iii.org/ (Insurance Information Institute – general insurance education)
https://www.naic.org/ (National Association of Insurance Commissioners – consumer insurance guidance)
FAQs – Builder’s Risk Insurance in Michigan
Is builder’s risk insurance required in Michigan?
It is not universally required by law, but many lenders and construction contracts require it before work or funding begins.
Who pays for builder’s risk insurance—the owner or contractor?
It depends on the contract. In some cases, the property owner pays. In others, the general contractor includes it in the project cost.
Does builder’s risk insurance cover stolen materials?
It may cover theft of materials from the job site, depending on the policy terms and security conditions.
Can builder’s risk insurance be extended if construction is delayed?
Yes. Most policies can be extended if the project takes longer than expected, though additional premiums may apply.
What happens when the project is finished?
Once construction is complete, builder’s risk insurance typically ends, and a standard property insurance policy takes over.
Get A Quote
If you’re planning a construction project in Michigan, getting the right coverage early can help avoid costly setbacks later.
For guidance tailored to your project, reach out to a licensed insurance professional at Wexford Insurance at 317-942-0549 or visit www.wexfordins.com for a free quote and review of your builder’s risk insurance options.
