If you’re a New York general contractor, chances are you’ve faced this question more than once: Who insures the building while it’s under construction? It may sound simple, but it’s one of the most misunderstood areas of construction risk management. Whether you’re building a new home, remodeling an existing structure, or adding an addition, the answer depends on who owns the project at each stage and what agreements are in place.
Let’s break it down—step by step.
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Scenario 1: You’re a General Contractor Building a New Home You Own
In this scenario, you’re not just the builder—you’re also the owner. You purchased the land, you’re financing the construction, and you plan to sell or occupy the finished property. That means you are responsible for insuring the building while it’s being built.
The correct policy for this is a Builders Risk Policy, sometimes called a “Course of Construction” policy. It’s designed to protect your investment from losses during construction.
A Builders Risk Policy covers:
• Fire, theft, vandalism, or wind damage to the structure while under construction
• Building materials on-site, in transit, or temporarily stored off-site
• Temporary structures (fencing, scaffolding, etc.)
• Sometimes, soft costs like permits, architectural fees, or lost interest due to delays from covered losses
What it doesn’t cover:
• Liability for injuries to others (that’s under your General Liability policy)
• Workers injuries (that’s covered by Workers’ Compensation)
• Faulty workmanship (that’s your responsibility, not an insurable event)
So if you’re both the owner and builder, you buy the Builders Risk policy in your own name. The moment the structure is complete and you obtain a Certificate of Occupancy, you can switch to a permanent property policy—homeowners insurance, landlord insurance, or commercial property insurance, depending on the project’s intent.
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Scenario 2: You’re a General Contractor Hired by a Homeowner
Now let’s flip it. You’re hired by a homeowner to build their new house. You’re not the owner—your client is. So who covers the building while it’s being built?
In almost all cases, the owner should purchase the Builders Risk Policy. Why? Because the owner has the insurable interest in the property. If the home burns down halfway through construction, the owner loses the value of what’s been built so far—not the general contractor.
However, this is where things can get messy if it’s not spelled out clearly in the contract. If there’s no mention of builders risk insurance, and the owner doesn’t buy it, you could be facing disputes and delays in the event of damage or loss.
To protect yourself as a general contractor:
1. Address builders risk insurance in your contract. State who is responsible for providing it—typically the owner.
2. Request to be named as an additional insured and loss payee. That way, if a covered loss occurs, your interests are protected as well.
3. Verify coverage before work begins. Don’t rely on verbal assurances. Ask for a copy of the policy or a certificate of insurance.
If the homeowner refuses to carry builders risk, some contractors will choose to buy it themselves to protect their work and materials. In that case, you’d list yourself as the insured party and the homeowner as an additional insured.
Bottom line: someone must carry builders risk—either the owner or the GC. Don’t start work without confirming who it is.
Scenario 3: You’re Building an Addition to an Existing Structure
Now imagine you’re hired to add a new section onto an existing home or commercial building. A kitchen extension, a second story, or a new office wing—whatever the project, you’re working on property that already exists and is likely insured.
In this case, the owner should contact their property insurance company before construction begins. They’ll need to ask whether their existing policy will extend to cover the new addition while it’s being built.
Often, standard homeowners or commercial property policies do not automatically cover structures under renovation or expansion. That’s why most insurance agents will recommend either:
• Adding a Builders Risk Endorsement to the existing policy, or
• Purchasing a separate Builders Risk Policy just for the addition
In some situations, the general contractor might again step in and buy the builders risk policy, especially if the owner is inexperienced or doesn’t have proper insurance guidance.
A good rule of thumb:
• If you’re working on someone else’s building, the owner should carry builders risk.
• If you’re building on your own land, you carry builders risk.
As a contractor, you should always confirm these details in writing before breaking ground.
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Why Builders Risk Coverage Matters
Builders risk coverage can mean the difference between a minor setback and financial disaster. Imagine this: you’re halfway through framing a new home when a windstorm rips through and destroys $100,000 worth of materials. Without builders risk coverage, someone—either you or the owner—will be paying that out of pocket.
Even worse, it could lead to lawsuits, delays, and ruined relationships. Proper builders risk insurance ensures that the project continues smoothly after a covered loss.
It’s also worth noting that lenders usually require it if there’s a construction loan. The bank wants to protect its financial interest just as much as you do.
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What About Renovations and Remodeling?
For remodeling jobs that don’t involve major structural work, the owner’s existing homeowner or commercial policy may offer limited coverage. However, policies vary widely. For example, if walls are opened up, roofs removed, or structural changes made, many insurers will refuse to cover the work in progress unless a builders risk endorsement is added.
So again, communication is key. Both the owner and contractor should consult with their insurance professionals before starting the job.
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BGES Group: Protecting New York Contractors
At BGES Group, we specialize in insuring New York contractors. Whether you’re a general contractor, subcontractor, or construction manager, we help you identify coverage gaps before they become costly mistakes.
We work with all major insurance carriers that understand the complexities of New York’s construction laws and insurance requirements—including labor law exposures, action-over claims, and contractual risk transfer.
Our team can help you secure:
• General Liability and Workers’ Compensation
• Builders Risk and Installation Floater policies
• Umbrella and Excess Liability coverage
• Certificates of Insurance and contract compliance reviews
We don’t just sell policies—we help contractors protect their businesses and win more jobs by making sure their insurance meets project and lender requirements.
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Final Thoughts
Builders risk insurance isn’t a luxury—it’s a necessity. Whether you’re the owner, the general contractor, or both, understanding who is responsible for covering the building during construction can save you thousands of dollars and countless headaches.
Before the first shovel hits the ground, make sure one question is answered: Who’s insuring the project?
If you’re not sure, BGES Group can help. We’ll review your project details, determine what coverage you need, and make sure you’re fully protected from start to finish.
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Contact BGES Group
Specialists in Insuring New York Contractors
📞 Gary Wallach: 914-806-5853
Protect your projects, your profits, and your peace of mind—with BGES Group by your side.