What Does Builder's Risk Not Cover?
It typically excludes worker injuries, tools and equipment, design errors, and wear or weather damage after construction stops for a while.
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Why this matters before you close
Builder's risk is the policy that covers the house itself while it's under construction, and it ends when the work does. It won't cover a worker hurt on site, that's a workers' comp issue for the contractor. It won't cover tools, scaffolding or equipment left on the property, those belong to whoever owns them. If the house was built wrong, a design flaw or bad framing, that's excluded too, since builder's risk covers accidents, not mistakes. If construction stalls for weeks and the place sits open to weather, damage from that gap may not be paid either. None of this is your homeowners policy. Once you close, your lender will want a standard homeowners policy in place, with dwelling coverage based on what it costs to rebuild the house, not what you paid for it.
Get the right policy lined up before closing
Builder's risk stops when construction ends. Your homeowners policy is a separate purchase with its own dwelling coverage, set by rebuilding cost, not price paid. Comparing options now avoids a scramble against the closing date.
When does builder's risk end and your homeowners policy begin
Builder's risk coverage doesn't stop on a date, it stops at a point in the construction process, usually when the house is finished and occupied or when ownership transfers at closing. If you're buying a house that's already built, this timing question may not apply to you at all. It matters more if you're having a house built from the ground up, where there can be a gap between when the builder's policy winds down and when your own homeowners policy needs to start. Ask the builder or general contractor directly when their builder's risk policy ends, and make sure your homeowners policy is active before that date, not after it.
Builder's risk also doesn't cover the land, the landscaping, or anything you bring onto the property that isn't part of the structure itself. If you move in appliances, furniture or building materials you purchased separately before the house is officially finished, those generally aren't protected under the builder's policy. This is another reason the handoff to homeowners insurance needs to happen cleanly, with no days unaccounted for.
Theft is another gap worth knowing about. Builder's risk sometimes excludes theft of materials unless specific coverage for it was added, since job sites are common targets before a house is secured with locks and windows. Once you own the house and have homeowners coverage in place, theft of your belongings is typically covered as part of personal property protection, but that protection doesn't exist until the policy starts.
None of this is something you negotiate with the builder's insurer. It's something you solve by having your own homeowners policy ready to go, with the effective date matched to when you take possession. Your lender will ask for proof of this before closing, usually in the form of a binder showing dwelling coverage, your deductible, and the effective date. Lining this up early means you're not trying to bind a policy the day before closing while also comparing rates, which is the position a lot of first-time buyers find themselves in without meaning to.
What about damage from floods or earthquakes during construction
Builder's risk policies typically exclude flood and earthquake damage, the same way standard homeowners policies do. If the property sits in a flood zone or an area with earthquake risk, that gap exists on both sides of the handoff, during construction and after you move in. It's worth asking the builder whether their policy includes either of these, since many don't add them unless specifically requested.
Your lender's requirements carry forward past the construction phase. If the lender is requiring flood insurance because of where the house sits, that requirement doesn't go away once builder's risk ends. A separate flood policy needs to be lined up alongside your homeowners policy, not instead of it. The same goes for earthquake coverage in areas where it's a real risk. Neither is bundled into a standard homeowners policy automatically.
Vandalism is another item worth checking on the builder's side. Some builder's risk policies cover vandalism to the structure while it's under construction, others don't, or only cover it after certain security measures are in place, like locks on doors and windows. If the site sits unfinished and exposed for a stretch of time, this is one of the areas where coverage gets thin, and it's a reasonable question to ask the builder directly rather than assume.
Once the house is yours, these risks shift from being the builder's problem to being yours, and they shift on the day your homeowners policy takes effect, not before. If flood or earthquake coverage applies to the property, add it at the same time you're setting up the homeowners policy itself. That way the effective dates match and there's no day where the house sits uninsured against a risk you knew about going in.
Before you close
Check the effective date on your homeowners binder against the day you take possession. Ask the builder when their builder's risk policy ends, and make sure there's no gap between the two dates.
