What Are the Most Common Claims Covered by Builders Risk Insurance?

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

Construction and renovation projects are exposed to unique risks that standard property insurance doesn’t cover. Builders risk insurance is designed to protect projects from start to finish—but understanding the most common claims helps property owners and contractors better manage risk and avoid costly delays.

Below are the claims most frequently covered by builders risk insurance during residential and commercial construction projects.

1. Fire and Smoke Damage Claims

Fire is one of the most severe and expensive builders risk insurance claims. Common causes include:

Electrical work and temporary wiring
Welding or hot work
Improper storage of flammable materials

Builders risk insurance typically covers damage to the structure, materials, and debris removal. According to the Insurance Information Institute, fire losses remain one of the top causes of construction-related claims.

2. Water Damage Claims

Water damage is one of the most frequent builders risk insurance claims, especially during renovations.

Common sources include:

Burst pipes or plumbing failures
HVAC system leaks
Heavy rain entering unfinished structures

Most builders risk policies cover sudden and accidental water damage, but gradual leaks or poor workmanship may be excluded.

3. Theft of Materials and Equipment

Construction sites are prime targets for theft, making this a common builders risk claim.

Covered losses may include:

Stolen lumber, copper, or appliances
Tools and materials stored onsite
Materials stolen while in transit

The National Insurance Crime Bureau reports that construction theft is a growing issue, reinforcing the importance of proper site security and insurance coverage.

4. Wind, Hail, and Storm Damage

Weather-related losses are a major driver of builders risk insurance claims.

Typical covered events include:

Wind damage to framing or roofing
Hail damage to exterior materials
Storm-related structural collapse

Properties under construction are more vulnerable to weather because they lack full structural protection.

5. Vandalism and Malicious Mischief

Vacant or partially completed buildings face increased risk of vandalism.

Builders risk insurance may cover:

Broken windows or doors
Graffiti damage
Intentional destruction of materials

Security measures such as fencing and lighting can help reduce these claims.

6. Collapse Due to Covered Perils

Structural collapse caused by a covered peril—such as wind or fire—is often included in builders risk coverage. However, collapse due to design flaws or faulty workmanship may be excluded, emphasizing the importance of quality construction practices.

Claims Typically NOT Covered Without Endorsements

Even comprehensive builders risk insurance policies have exclusions. Common exclusions include:

Flood damage (requires separate coverage via the National Flood Insurance Program)
Earthquake damage (optional endorsement)
Normal wear and tear
Contractor errors or defective workmanship

Understanding exclusions is just as important as knowing what’s covered.