Who Usually Pays for Builders Risk Insurance?
Usually the builder or developer during construction, though on custom jobs the property owner often pays, as spelled out in the contract.
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During construction vs. after
Builders risk insurance covers the property while it's being built. It ends at completion. Once you close and move in, that policy stops applying and your own homeowners policy takes over, which is the one your lender needs proof of before closing.
What your contract says
If you're having a custom home built, check the construction contract. It should state whether you or the builder carries the builders risk policy during the build. Either way, this is separate from the homeowners policy you need in place at closing.
What your lender actually wants
Lenders require a homeowners insurance binder before closing, showing dwelling coverage at least equal to the loan amount. Builders risk insurance on an unfinished house does not satisfy this. You'll still need to shop for and bind a standard homeowners policy.
Buying an existing home
If you're purchasing a house that's already built, builders risk insurance likely has nothing to do with your purchase. It applies to new construction or major renovation projects, not resale homes. Your declarations page and closing documents will confirm which policy applies to you.
Your closing date is set, your policy isn't
The lender needs a homeowners binder before closing, not a builders risk certificate. Comparing policies now gives time to match dwelling coverage to your loan amount and still make the date.
What happens if the house isn't finished when you close
Some purchases close before construction is fully done, especially with new builds where punch-list items carry past closing. In that case, builders risk insurance on the structure and your homeowners policy can overlap for a short stretch. The builder's policy may still be in force to cover unfinished work while your homeowners policy starts protecting the house as your residence. Check with the builder about when their coverage actually ends, since contracts don't always say and the date matters for both sides.
If you're building the house yourself, as an owner acting as your own general contractor, you're likely the one responsible for the builders risk policy, not a separate homeowners policy, until the house is livable. Lenders financing a construction loan usually require proof of builders risk coverage at closing on the loan, which is a different closing than the one at completion. Once the certificate of occupancy is issued and the construction loan converts to a permanent mortgage, that's when the lender will ask for a standard homeowners binder instead.
Renovation projects raise a similar question. A gut renovation or major addition on a house you already own, or are about to own, may need builders risk coverage for the period of work, since a standard homeowners policy often excludes damage tied to active construction or doesn't cover materials and structure not yet part of the finished home. Whether you or the contractor carries that policy should be in the renovation contract, same as new construction. Check with the contractor directly if it isn't spelled out.
None of this changes what the lender wants to see at the closing table for the home purchase itself. That binder needs to show dwelling coverage tied to the loan amount, starting the day you take ownership. Builders risk, if it applies to your situation at all, runs on its own timeline and is tracked separately from the homeowners policy that takes effect at closing. If you're unsure which applies to your purchase, the purchase agreement or construction contract will say, and it's worth confirming before the closing date gets close.
Can you cancel builders risk insurance once it's not needed
Builders risk insurance is written to end on its own, not to be canceled like an ongoing policy. Most policies are issued for a fixed term, often six months to a year, matched to the expected construction schedule. When the house is finished and occupied, or when the term runs out, the policy lapses rather than needing to be shut off. If construction runs long, whoever holds the policy, builder or owner, usually has to request an extension before that term ends, not after.
If you're the one who paid for builders risk coverage, whether as an owner-builder or under a custom contract that put it on you, check whether any unused premium comes back. Some insurers prorate a refund if the house is finished well ahead of the term. Others write the premium as fully earned once coverage starts, meaning there's nothing to recover regardless of when the work wraps up. The policy documents will say which applies, and it's worth knowing before you pay for a term far longer than the build is likely to take.
None of this is something to manage after the fact at your homeowners closing. The lender reviewing your homeowners binder isn't looking for proof that builders risk ended. The two policies aren't linked in the lender's paperwork, even on a new build where both existed at different points. What matters for closing is that the homeowners policy starts on time and meets the dwelling coverage the loan requires.
Where the overlap matters more is cost. If a builder passed the cost of builders risk coverage into the contract price, that's already settled before closing and won't show up as a separate line item. If you carried it yourself as an owner-builder, that's a construction cost, separate from what you'll pay for the homeowners policy going forward. Mixing the two up when comparing homeowners quotes is an easy mistake. The homeowners premium is what to shop, since that's the one that renews every year after you move in.
Before you shop
Find out from the purchase agreement or contract whether builders risk even applies to you. If it doesn't, you just need a standard homeowners binder with dwelling coverage matching your loan amount, ready before closing.
