Builder's Risk Insurance
for California Construction
If a structure under construction is destroyed by fire, vandalism, or weather before completion, your General Liability policy won't pay. Builder's Risk covers the structure itself — from groundbreaking to certificate of occupancy.
California has the highest wildfire risk in the US. Structures under construction in WUI zones are especially vulnerable — no landscaping buffer, no fire suppression systems.
Atmospheric rivers and flash floods can destroy partially completed structures. Builder's Risk covers water damage from storms — a standard property policy won't apply.
Most California construction lenders require Builder's Risk as a condition of funding. Without it, your draw schedule can be delayed or your loan can be called.
What Builder's Risk Covers
A Builder's Risk policy is an "all-risk" property insurance policy that covers the structure under construction and associated materials against physical loss or damage. Coverage begins when construction starts and ends when the project is complete and occupied — or when the policy term expires.
Cost Guide by Project Type
| Project Type | Project Value | Est. Policy Cost | Typical Term |
|---|---|---|---|
| Residential Addition / Remodel | $50,000–$200,000 | $500–$2,000 | 3–6 months |
| Custom Home (Wood Frame) | $500,000–$1M | $5,000–$15,000 | 6–12 months |
| Custom Home (Masonry/Steel) | $500,000–$1M | $3,500–$10,000 | 6–12 months |
| Small Commercial Build-Out | $200,000–$500,000 | $2,000–$7,500 | 6–12 months |
| Multi-Family / Apartment | $1M–$5M | $10,000–$50,000 | 12–24 months |
California Civil Code §2782.05 — Indemnity in Construction Contracts
California Civil Code §2782.05 references "Builders all-risk or named perils property insurance" in the context of construction contract indemnity agreements. Many California construction contracts require the GC to maintain Builder's Risk coverage and name the owner and lender as additional insureds. Failure to comply can void indemnity protections and expose the contractor to direct liability.
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Builder's Risk Insurance FAQ
What is Builder's Risk insurance and who needs it in California?
Builder's Risk insurance (also called Course of Construction insurance) protects a building or structure while it is under construction or undergoing major renovation. It covers the physical structure, materials on-site, and materials in transit against fire, theft, vandalism, wind, and other perils. In California, it is needed by general contractors, custom home builders, remodelers, and property owners on any project where the structure is exposed to loss before completion. Lenders almost always require it as a condition of a construction loan.
Does Builder's Risk cover wildfire damage in California?
Yes — fire is one of the primary covered perils under a Builder's Risk policy, including wildfire. This is particularly important in California, where structures under construction in fire-prone areas (WUI zones) are at significant risk. However, some insurers exclude or sublimit wildfire coverage in high-risk ZIP codes. Asena Capital works with carriers that provide full wildfire coverage for California construction projects — we review your project location and ensure you have adequate fire protection.
How much does Builder's Risk insurance cost in California?
Builder's Risk premiums in California typically range from 1% to 4% of the total completed project value. For a $500,000 home construction project, expect to pay $5,000–$20,000 for the policy term (usually 6–12 months). Minimum premiums start around $500–$700 regardless of project size. Factors affecting cost include project location (wildfire zone, flood zone), construction type (wood frame vs. masonry), project duration, and coverage limits.
Who purchases Builder's Risk — the contractor or the property owner?
Either party can purchase Builder's Risk, but the policy should name all parties with a financial interest in the project: the property owner, the general contractor, and the lender (if applicable). In practice, the general contractor often purchases the policy and includes the cost in the project budget, or the property owner purchases it as required by their construction lender. The contract between owner and contractor should specify who is responsible for obtaining Builder's Risk coverage.
Does Builder's Risk cover materials stored off-site?
Standard Builder's Risk policies cover materials and supplies at the job site and often cover materials in transit to the site. Coverage for materials stored at a separate location (warehouse, supplier's yard) is typically limited or excluded unless you add an off-site storage endorsement. If you have significant materials stored off-site before delivery, discuss this with us — we can ensure your policy includes adequate off-site coverage.
What does Builder's Risk NOT cover?
Builder's Risk does not cover: (1) worker injuries — covered by Workers' Compensation; (2) third-party liability claims — covered by General Liability; (3) faulty workmanship, design errors, or defective materials — these are excluded under standard property policies; (4) earthquake damage — requires a separate earthquake endorsement or policy; (5) flood damage — requires a separate flood policy or NFIP coverage. Understanding these exclusions is critical for California contractors working in earthquake and flood zones.
Does Builder's Risk cover renovation projects?
Yes — Builder's Risk can be written for renovation and remodeling projects as well as new construction. For renovations, the policy typically covers the new work being performed and materials on-site. The existing structure may also be covered if it is included in the policy. Renovation projects in occupied buildings require special consideration — some carriers restrict coverage if the building remains occupied during construction. We review your specific renovation scope and recommend the appropriate coverage structure.
Protect Your Project Before the First Nail
Don't start construction without Builder's Risk coverage. We bind policies quickly — before your next draw or permit pull.