When it comes to protecting your construction business, having the right insurance coverage is critical. Two of the most important types of policies in the industry are Builder’s Risk Insurance and General Liability Insurance. While both offer protection, they cover different risks and are often confused. Here’s a breakdown of how these policies differ and why both may be necessary for your construction project.
What is Builder’s Risk Insurance?
Builder’s Risk Insurance, also known as commercial construction insurance, provides coverage for buildings and structures under construction. It protects against damage to the physical property caused by:
- Fire
- Vandalism
- Theft
- Weather events (like wind or hail)
- Accidental damage during construction
This policy is typically purchased by builders, property owners, or contractors and lasts for the duration of the construction project.
Key Coverage Includes:
- Building materials on-site, in transit, or temporarily stored
- Structures under construction
- Soft costs (in some cases), like permits or lost income due to delays
What is General Liability Insurance?
General Liability Insurance protects against third-party claims for bodily injury, property damage, and personal injury (such as libel or slander) arising from your business operations. This policy is essential for defending against lawsuits and paying for damages.
Key Coverage Includes:
- Injuries to visitors or subcontractors on-site
- Damage to a client’s property
- Legal defense costs
- Advertising injury
Major Differences at a Glance
| Feature | Builder’s Risk Insurance | General Liability Insurance |
|---|---|---|
| Coverage Focus | Property under construction | Injuries and third-party property damage |
| Who It Covers | Builders, developers, owners | Contractors, subcontractors, business owners |
| Duration | Until project completion | Ongoing (annual policy) |
| Claims Examples | Fire damages a partially built structure | A visitor trips on-site and sues for injuries |
Why You May Need Both
In the construction world, Builder’s Risk and General Liability work together, not as substitutes. While Builder’s Risk covers the project itself, General Liability covers people and third-party property involved during the construction process.
For example:
- A storm damages the roof of a structure you’re building → Builder’s Risk covers it.
- A delivery driver slips on-site and breaks an arm → General Liability covers the medical and legal costs.
Conclusion
Having both Builder’s Risk and General Liability Insurance provides comprehensive protection for your construction business. One guards the structure, the other protects you from lawsuits and liability claims. Skipping either could expose you to significant financial loss.
