Building a Custom Home? Don’t Forget Builder’s Risk Insurance

There are many things to consider when building a custom home. You have to plan the floor layout, choose paint colors, buy furniture, and pick home decors that suit your liking. While building a home is exciting, there are some details that homeowners fail to remember during the process.

Builder’s risk insurance is one of the essential things most people forgot, together with building permits and zoning. It’s crucial to ensure that your home is under the builder’s risk coverage during the construction process to protect it from mishaps and circumstances.

Building a Custom Home

What exactly is Builders Risk Insurance? Why do you need it? Here’s a brief guide to Builders Risk Insurance basics and why homeowners should have one for their homes. 

What Is Builders Risk Insurance? 

Builder’s Risk Insurance is property insurance that covers and protects your home while it’s under construction. It can cover the structure, equipment, and materials used to build your home. The precise coverage and limitations depend on your insurance providers. Still, Builder’s Risk coverage mainly offers assistance for cases of theft, vandalism, soft costs, earthquakes, flood, ordinance, and law, as well as fencing, landscaping, temporary structures, and scaffolding. Many unpredictable things can happen during the construction stage, and a comprehensive Builder’s Risk policy can help you avoid painful losses if you ever encounter an accident or mistake. 

The length of policies ranges from three months, six months, or a year. Regarding building and development projects, the policy usually calls for things to be finished within a year. Some policies allow renewal or extension, but for this to happen, a just cause is required and there must be a logical explanation. When projects are given a long time-limit, their costs increase dramatically while those that was completed on time are very efficient.

How Much Does It Cost?

It is better to have a Builders Risk Insurance ready if there are building errors during the construction. The policy could range between one to four percent, but it will depend on the insurance plan type selected. Having a good insurance company will help you expedite the claims process and solve problems during the construction. Many corporations carry liability insurance protection on their properties, but that raises their financial total risk. You can ask your insurance company to include the soft costs coverage in your plan so it will be ready when your need it. 

custom buildings

There are some factors that you should consider when calculating the overall cost of your insurance policy plan:

  • Location: The implementation of policy cost depends on where you are building your home. Depending on the various dangers that is associated with the site, the expense might increase. For example, if the construction area is a place where wildfire or floods likely to happen, the insurance cost will likely to increase.
  • Construction Period: The cost of your policy depends on how long the construction will take. When an average home was built in less than a year, your premium insurance price might increase because the construction was completed before the delivery. 
  • The amount you spend can be impacted by the number of deductibles you select. If you choose a higher deductible, you can save money on your premium. However, if you would have bought a standard homeowner’s insurance, the total cost for builders’ liability insurance will likely be about the standard insurance for a home.

Considering these factors will help you decide what kind of insurance coverage policy or plan that your will choose before you decide the construction. You have to select an insurance plan policy that suit the location and construction period. Don’t forget to include the soft cost coverage.


Building a custom home is a huge investment, and you want to protect it as much as you can. It would be best if you’ll consider all the potential risks that can happen during the construction process. and prepare for it by getting a Builders Risk Insurance that will last throughout the whole building process. When you have your insurance policy plan, you need to know all the possible coverage that you can get from it so you can use is when you need it. Calculate your overall cost by considering the location of where you were building your home, how long the construction period will take and the deductibles that you should choose. Knowing all this, you don’t have to worry too much about how your custom home will turn out!

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.