Short answer
Builders risk is a property policy written for the length of one construction or major remodeling project. It covers the structure as it goes up, the materials that will become part of it, and often temporary items such as scaffolding and fencing, against the causes of loss the form lists. It is not a liability policy, it is not workers compensation, and it usually does not cover a contractor’s own tools. A homeowners or landlord (DP-1, DP-3) policy is written for a finished building that someone maintains, which is why a build or a gut remodel is a separate conversation with your agent. Call (209) 670-1556 before the first permit inspection, not after the first loss.
Why a normal property policy is not enough during a build
The California Standard Form Fire Insurance Policy in Insurance Code section 2071 says the insurer is not liable for loss that happens “while a described building, whether intended for occupancy by owner or tenant, is vacant or unoccupied beyond a period of 60 consecutive days,” and it also lets the insurer deny a loss “while the hazard is increased by any means within the control or knowledge of the insured.” Open framing, a missing roof, stored lumber, temporary power, and nobody living in the building are exactly what a construction site looks like. A policy can provide otherwise in writing, which is what a builders risk form does. The point is to have that written agreement before work starts, not to find out about the wording during a claim.
Who buys it: owner, general contractor, or both
Whoever has an insurable interest in the building can buy it, and the construction contract usually says who must. Common setups:
- Owner buys it. Typical for an owner who is building a house, a rental, or an ADU, and for developers. The lender is listed as loss payee.
- General contractor buys it. Common on commercial jobs. The owner is named as an insured and the contract spells out deductibles and who pays them.
- Owner-builder. Under Business and Professions Code section 7044 an owner can build on their own property without a contractor license in limited cases, for example when the work is not intended or offered for sale and is done by the owner or wage-only employees, or when licensed contractors are hired directly. The CSLB owner-builder overview lists the limits. Because the owner is then acting as the contractor, expect the underwriter to ask who is doing which work.
Do not assume the other party has it. Ask for the declarations page, the policy term, the covered location, and the deductible in writing before the first draw.
What builders risk usually covers
| Item | How it is usually handled | What to ask |
|---|---|---|
| The structure under construction | Covered up to the completed value you report, against the causes of loss in the form (fire, lightning, explosion, wind, theft, vandalism, and others depending on the form). | Is it special form or named perils? Is the limit the completed value or the value built so far? |
| Materials and supplies | Covered on site, and often in transit or at a separate storage location if the form lists them. | Is off-site storage covered, and up to what sublimit? |
| Permanent fixtures waiting to be installed | Often covered once they are on the project’s list of materials. | Are appliances, HVAC units, and solar panels included before installation? |
| Temporary structures | Scaffolding, fencing, forms, and temporary power are often a separate, smaller limit. | Who owns them, and are they on this policy? |
| Debris removal | Usually covered after a covered loss, sometimes within the limit. | Is it inside or on top of the building limit? |
| Soft costs | Interest, permit re-filing fees, and extra design costs after a delay caused by a covered loss. Added by endorsement. | What counts as a soft cost, and how long is the waiting period? |
Forms differ by carrier, so these are the questions to read the policy against, not a promise of coverage.
What it usually leaves out
- Liability. A neighbor or visitor hurt on the site is a general liability claim, and the contractor’s workers need their own workers compensation. The contractors page covers those policies.
- Contractor’s tools and equipment. These are normally insured on an equipment or installation floater, not on the project policy.
- Faulty workmanship and wear. Property forms usually pay for the resulting loss in some cases but not the cost to redo the defective work itself. The exact line is in the exclusions.
- Earthquake and flood. The California Department of Insurance homeowners guide points out that standard homeowners policies do not cover earthquake or flood, and commercial property forms are generally the same unless the coverage is added. If the site is in a flood zone or the lender requires it, ask for it by name.
- Existing parts of the building in a remodel. Builders risk covers the new work. The existing structure stays on the property policy, which is why the two policies have to be coordinated.
Remodeling a house you already own
A big remodel or gut renovation is where owners are most often surprised. If the house is a rental, the same increased-hazard and vacancy wording applies, and our vacant rental property guide walks through the 60-day rule. If the house is owner-occupied, tell the agent before work starts, because the homeowners carrier may attach an endorsement, ask for the contractor’s license and insurance certificate, or require a separate builders risk policy for the project. A rented ADU or a converted garage is a project like any other; see the rented ADU guide for how the finished unit is insured, and the landlord insurance (DP-3) guide for the house itself.
When coverage starts and when it ends
Coverage usually starts when work or materials are at the described location and ends at the earliest of: completion, the day the building is occupied or put to its intended use, sale of the building, or the policy expiration date. Two practical points follow. First, the permanent policy has to be ready before the builders risk ends. Ask for the quote on the finished building (homeowners, DP-3, or commercial property) while the framing is going up, so there is no gap on occupancy day. Second, delays happen. Ask what the extension cost is and whether the policy has a hard end date, so an inspection delay does not leave a finished but unoccupied building uninsured.
If a standard carrier declines the project
The California FAIR Plan lists “buildings under construction” among the commercial property it writes, described as residential and commercial buildings under construction from the ground up. Its commercial policy is named perils (fire, lightning, internal explosion, with optional extensions such as vandalism and malicious mischief), so it is basic property coverage and not a full builders risk form. The Plan of Operation also carves ongoing construction out of its rule against buildings that are vacant for more than one year. The FAIR Plan is a last resort that is placed through a broker after a search of the regular market. It may be a stopgap; it is not a substitute for liability coverage.
Who the underwriter wants to know about
The builder’s license matters. By law, anyone who bids on or contracts for work valued at $1,000 or more in labor and materials must be licensed by CSLB, and any job that needs a permit needs a licensed contractor unless an exemption applies (CSLB owner-builder guide; Business and Professions Code section 7048). Have the general contractor’s license number and the permit number ready; carriers ask for both.
What we need to quote a builders risk policy
- Project address, parcel, and the type of building (single-family, ADU, duplex, commercial shell)
- New construction, addition, or remodel, and what stays standing
- Completed value, plus the cost of materials the owner supplies
- Start date, expected completion, and whether the project may run over
- General contractor name, CSLB license number, and permit number
- Construction type (wood frame, steel, masonry), number of stories, and whether the site has fencing, a security guard, or cameras
- Lender name for the loss payee line, if there is financing
- Wildfire or flood location, and whether you want earthquake or flood quoted
Send it to us and we compare options across carriers, then walk through the form with you. Call (209) 670-1556. Insurance City Agency, LLC · CA License #6003045 and we are in Stockton and San Jose; you can also use the quote request below.
If a loss happens
Under the section 2071 conditions, the insured gives written notice without unnecessary delay, protects the property from further damage, and sends a sworn proof of loss within 60 days unless the insurer extends that in writing. Dated progress photos taken weekly help show what was in place and what stock was on site. A theft of materials also needs a police report number.
Frequently Asked Questions
What does builders risk insurance cover?
It covers the building under construction and the materials that will become part of it, on site and often in transit or in storage, against the causes of loss in the form. Temporary structures, debris removal, and soft costs can be added or sublimited. It does not replace liability, workers compensation, or a contractor’s equipment floater.
Who should buy builders risk, the owner or the contractor?
Either one can, if they have an insurable interest. The construction contract and the lender usually decide. If the contractor buys it, make sure the owner and lender are named and that the deductible is stated in the contract.
Does my homeowners or landlord policy cover a remodel?
Not by default. Insurance Code section 2071 lets an insurer deny a loss while the building is vacant beyond 60 consecutive days or the hazard is increased, unless the policy provides otherwise in writing. Tell your agent before a major remodel so the right endorsement or a separate builders risk policy is in place.
When does builders risk end?
Usually at completion, when the building is occupied or put to use, when it is sold, or when the policy expires, whichever comes first. Have the permanent policy ready before then and ask what an extension would take if the project runs late.
Can I get builders risk through the California FAIR Plan?
The FAIR Plan lists buildings under construction among its commercial property and writes a named-perils policy (fire, lightning, internal explosion, with optional extensions). It is basic property coverage placed through a broker as a last resort, not a full builders risk form.
Does builders risk cover earthquake or flood?
Not by default. Earthquake and flood are usually excluded from standard property forms and have to be added or bought separately. Ask for them by name if the site or lender requires it.
Sources
- California Insurance Code section 2071 (Standard Form Fire Insurance Policy)
- California Business and Professions Code section 7044 (owner-builder exemption) and section 7048 ($1,000 threshold)
- CSLB, Owner-Builder Overview and CSLB, Owner-Builders Beware
- California FAIR Plan, Commercial policies and FAIR Plan Stipulation and Order and Plan of Operation (CDI)
- California Department of Insurance, Residential Insurance guide
Last reviewed October 9, 2026. General information, not a quote or a promise of coverage; the policy wording controls.
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