Do Contractors Carry Builder Risk Insurance?
Sometimes, but it's often the homeowner's responsibility to arrange during construction. Check your contract before assuming the builder has it covered.
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Who's covering the house while it's being built
A general contractor may carry builder's risk insurance, but many don't unless the contract requires it. Builder's risk covers the structure itself while it's under construction, things like fire, theft of materials, or storm damage before the house is finished. It's different from the homeowners policy your lender wants before closing, which takes over once the house is done and you own it. If you're having a house built, check the construction contract for a clause naming who buys this coverage and for how much. If it's silent or puts it on you, you'd need to buy a separate builder's risk policy yourself. Either way, this is separate from the homeowners insurance binder your lender needs for closing, so getting one doesn't replace the other.
If the contract leaves builder's risk coverage unclear or on you, that's a gap worth closing before the house is finished, not after a storm or a theft on the job site finds it. Lining up the homeowners policy your lender needs for closing is a separate task either way, and it's worth comparing options now so you're not scrambling to meet the binder deadline.
When does the homeowners policy start if the house isn't finished yet
Homeowners insurance is written for a finished, occupied house. It assumes there's a roof, working systems, and someone living there or about to. If you're buying a house that's still under construction, the lender's closing date usually lines up with substantial completion, the point where the house is livable even if small items remain. Your homeowners binder typically takes effect at closing, not before, because that's when the risk shifts from the builder's materials and labor to an actual dwelling you own.
Builder's risk and homeowners coverage aren't meant to overlap. Builder's risk covers the construction phase, before there's a finished house to insure the normal way. Once the house passes inspection and closes, that policy ends and homeowners coverage picks up. If there's a gap between when builder's risk lapses and when your homeowners policy starts, ask the builder or your closing agent directly rather than assume someone else is watching for it. A week with no coverage on a finished, unoccupied house is a real exposure, especially for theft or vandalism.
Closing dates on new construction slip often. If yours does, tell whoever is binding your homeowners policy right away. Insurers set a binder to a specific start date, and if closing moves, the binder may need to move with it. An outdated binder can also hold up closing itself, since lenders check that the coverage dates match the funding date before releasing money.
Once you're in the house, the dwelling coverage amount on your new policy should reflect what it costs to rebuild the structure, not the purchase price or the builder's contract price. Those numbers can differ quite a bit on new construction, since the sale price may include the lot, upgrades, or builder margin that don't factor into rebuilding costs. Ask your insurer how they arrived at the rebuild estimate, and check it against the final construction cost if you have it.
What if you're buying an already-built house, not a new construction
Most of the people reading this aren't building a house from scratch. They're buying one that's already standing, sometimes decades old, and the builder's risk question doesn't apply to them at all. If that's your situation, the house has already gone through its construction phase and whatever coverage existed then is long expired. What matters now is the homeowners policy that starts at your closing.
Where builder's risk still comes up for a resale is if the house had recent major work done, an addition, a gut renovation, a new roof after storm damage. If that work was still underway when the sale was negotiated, ask whether it was insured separately during the renovation and whether it passed final inspection before you close. An unfinished permit or an uninspected addition can also affect what your homeowners insurer is willing to cover, since some won't write a policy on work that hasn't been signed off by the local building department.
If the house is newly built but you're not the original buyer, the same logic applies. Ask whoever sold it to you, whether that's the builder directly or an investor who bought and finished the house, for the certificate of occupancy and any records of what coverage was in place during construction. You don't need that paperwork for your own policy. It tells you whether the structure was properly inspected and insured the whole way through, which matters if a defect from the build phase shows up later.
For a standard resale with no recent construction, the task in front of you is simpler. Get the homeowners binder in place by your closing date, with dwelling coverage set to what it costs to rebuild the house, not what you're paying for it. Builder's risk isn't part of this conversation unless the seller tells you otherwise.
Before closing
Check your closing date against your binder's start date, and confirm the dwelling coverage amount reflects rebuild cost, not the price you're paying for the house.
