The Cost Of Builder’s Risk Insurance


Builder’s risk insurance is one of the measures that property owners take to protect their construction projects. It offers protection against a wide range of disasters, be it natural or human-made. From theft to fires or storms, the right builder’s risk policy can compensate you accordingly for the damages. Sound insurance can mean the difference between the end of a dream and a delay in creating it. Most plans that pertain to builder’s risk cost between 1% to 4% of the total construction costs.

Be mentally prepared to spend a sum of around $10,000 to $40,000 on a policy that covers the basics for an apartment that costs a million dollars to build. While it may sound like a tough pill to swallow, it has its benefits and perks. The prices vary based on the details and other factors. In this age of uncertainty, some also offer protection measures against the pandemic. The following sections break down the main factors that impact the builder’s risk insurance policy cost.

Factors That Affect The Builder’s Risk Insurance Cost

1 – A New Construction Project

A new project requires coverage for a variety of tasks, from the basic ones to the more complex variety. From excavation, site preparation to plumbing, and laying lines for electricity, these tasks significantly drive up costs and take up immense resources and manpower. Each step in this process is at risk of being affected by all forms of damage and losses. And in an age where a pandemic keeps most workers indoors, the right policy is an absolute necessity. As a result, these steps play a significant role in terms of a builders risk insurance policy. This reason is why this form of insurance for a building must be obtained before the construction project begins.

2 – Location Of The Project

The rates of insurance policies vary significantly from state to state, and even from region to region. They could also vary based on the area where the construction will occur. Some locations may be prone to hailstorms, fires, or other natural disasters. A few areas may also be prone to theft and vandalism. Policies will take those factors into account as well.

3 – Duration Of The Construction

The duration of a project is directly related to the cost of the policy that you obtain. This link is because the window for accidents is smaller with shorter time durations, as a rule of thumb. Smaller projects face lower risks in general, especially when it comes to crime, theft, and vandalism risks. Besides, longer projects often have more downtime in general. Leaving the building site unattended leaves it open for further losses of all kinds.


While the costs may seem rather significant, especially for larger projects, it is undoubtedly worth the price to protect your investment. Builder’s risk insurance is an essential tool that will ensure that things sail smoothly even during unsettling times. Situations that could have been nightmares for your finances will be reduced to mere temporary setbacks that can be overcome. Invest in a comprehensive policy and get your project off to a solid start!