Builder's Risk Insurance in North Carolina

Builder's risk insurance is a specialized property policy that covers a structure while it is under construction. Coverage applies to the building itself as it is being built, materials that are part of the structure, and materials stored on site that have been delivered but not yet installed.

Standard covered perils include fire, lightning, wind, hail, vandalism, and theft of materials. Some policies extend to cover temporary structures on site, debris removal after a covered loss, and soft costs related to a covered claim such as architectural fees or permit costs. Policy terms vary between carriers, so the specific covered perils and coverage limits depend on the policy you purchase.

Builder's risk is a property policy for the structure in progress. It does not cover liability for injuries that occur on the job site. General liability coverage and workers' compensation for construction workers require separate policies, which the general contractor typically carries.

It also does not cover tools and equipment owned by contractors or subcontractors, employee dishonesty, or damage from faulty workmanship. Flooding is typically excluded unless a separate flood endorsement is added. Once construction is complete and the home is occupied, builder's risk no longer applies and a standard homeowners policy is required.

In a production build, where a developer constructs homes in a subdivision and sells them at completion, the builder typically carries builder's risk during construction. The buyer only needs to have a homeowners policy in place at or before closing.

In a custom home build, where a property owner hires a general contractor to construct a home on their land, the responsibility for builder's risk depends on the construction contract. The owner may be required to carry the policy, or the general contractor may carry it. This should be specified in the contract before breaking ground.

In an owner-builder arrangement, where the property owner acts as general contractor and manages all subcontractors directly, the owner is responsible for all coverages including builder's risk, and often faces more limited carrier options because of the elevated risk profile.