Home Builder Insurance Deductibles and Limits: What Owners Should Know
- Nate Jones, CPCU, ARM, CLCS, AU
- 4 hours ago
- 2 min read
If you build custom homes, tract housing, condos, mobile/modular homes, or multi‑family, the strength of your home builder business insurance rests on two levers: deductibles and limits. These determine what you pay out of pocket at claim time and how much your insurer pays on your behalf. Getting them wrong can mean overpaying on premium, or being dangerously under-insured on a major loss.
Below is a plain‑English guide to help you set deductibles and limits wisely before requesting a home building business insurance quote.
1) What Is a Deductible?
A deductible is the amount your company pays first when a covered loss occurs. You’ll typically see deductibles on:
Builder’s Risk (course of construction)
Commercial Property / Inland Marine (tools, equipment, materials)
Commercial Auto physical damage
Certain liability coverages or endorsements
Higher deductibles usually lower premium, but raise your cash outlay at claim time. Builders often choose higher deductibles on predictable, smaller losses (e.g., tool theft) and lower deductibles on less frequent, high‑severity risk areas.
2) What Are Insurance Limits?
A limit is the maximum an insurer will pay for a covered claim. Key limits for home builders include:
General Liability (premises/operations, products–completed ops)
Builder’s Risk (based on completed value of each project)
Contractors’ Tools & Equipment (Inland Marine)
Business Income/Extra Expense (time to restore operations)
Commercial Auto liability and physical damage
Umbrella/Excess Liability
Set Builder’s Risk to the anticipated completed value, including materials, labour, and eligible soft costs if you add that coverage. For GL, align limits with contract requirements (and consider an Umbrella when working condos/multi‑family or large tract sites).
3) Balancing Deductibles and Limits to Control Cost
Your premium reflects how you structure both:
Higher limits → higher premium (but stronger protection)
Lower limits → lower premium (but greater risk retained)
Higher deductibles → lower premium
Lower deductibles → higher premium
Smart tactic: Keep strong limits where severity is high (Builder’s Risk, GL, Umbrella) and use moderately higher deductibles on property/tools where you can absorb manageable losses. Always confirm contract minimums for GL, Auto, Umbrella, and Waivers/Additional Insured terms.
4) Practical Steps Before You Quote
Inventory tools/equipment and validate replacement cost values annually
Confirm completed value per project and realistic build duration for Builder’s Risk
Set Business Income limits around your likely downtime and expense burn rate
Document subcontractor transfer (COIs, AI/PNC, Waivers) to support better pricing
Keep 3–5 years of loss runs and your safety/QC programs ready for underwriters
Get the Right Structure for Your Home Builder Insurance
Not every insurer understands home construction risk, and selecting the wrong deductibles or limits can leave your business exposed. Wexford Insurance partners with top‑rated carriers that specialise in home builder business insurance, helping contractors set optimal limits, deductibles, and endorsements, without overpaying.
👉 Request your Home Builder Business insurance quote from Wexford Insurance today and make sure your projects, crews, and equipment are fully protected.
