Does Builder’s Risk Coverage Differ for Residential vs. Commercial Construction Projects?

Builder’s Risk insurance is critical for residential and commercial construction projects, as it covers the property during construction or renovation. While Builder’s Risk policies for both types of projects offer similar coverage, such as insuring for damage to the structure from fire, theft, and other covered perils, there are important distinctions between residential and commercial coverage.

Project Type and Scale

Residential construction typically involves building or renovating single-family homes, duplexes, or small multi-family units, while commercial projects are often larger in scale and can involve office buildings, retail spaces, multi-unit housing, or industrial facilities. Commercial construction can also involve higher total insurable value (TIV) and more complex coverage needs. In some cases, commercial projects may require additional coverage, such as loss of rental income, business interruption costs, and extra expenses if the completion of the project is delayed.

Commercial projects also often involve higher-risk factors, particularly when renovating existing properties such as restaurants, office buildings, or retail stores. For example, securing equipment like gas lines or ensuring fire safety compliance might be more critical in commercial projects.

Exclusions and Location-Specific Coverage

For residential and commercial projects, location plays a crucial role in determining the type of coverage. Additional endorsements may be required to cover these specific risks in areas prone to floods or earthquakes. However, specific Builder’s Risk policies exclude these perils, so it’s critical to obtain any additional needed coverages as part of the client’s overall property protection program.

Our Builder’s Risk Policy

Distinguished’s program is ISO-based, providing robust coverage for ground-up construction and remodeling projects. We cover building costs, foundations and underground property, onsite materials, goods in transit, fixtures, equipment, and temporary structures. Temporary structures may include scaffolding, temporary buildings or structures, fencing, and antennas. Materials stored outdoors or outside a predetermined distance from the construction project are also covered.

We offer 3-, 6-, 9-, or 12-month policies, with extensions available upon review. We cover all types of construction – from fire-resistive to frame. Limits of up $20 million are available, depending on the construction type and state.

Our plan offers various extra coverages and sublimits. It covers the costs of bringing a building back up to code after physical damage caused by a covered risk. The policy also covers water damage and repair costs in the event that a sewer or drain backs up into the structure.

Supplies and equipment stored during construction before being delivered to the job site are also covered. Trees, shrubs, and plants are protected on the project site while planting, installation, or construction is underway.

We also cover soft costs up to 10% of the total project value. Soft costs are reasonable and necessary expenses incurred during the construction, installation, or manufacturing of a building or structure that would not have occurred absent direct physical harm. These include advertising and design fees, professional fees, lease administration costs, and additional real estate taxes and assessments incurred because construction was delayed beyond the estimated completion date.

It’s Easy to Get Coverage with Our Online Portal

You can use our online portal to get a quote for your client. Simply register your brokerage, go to our Broker Portal, and spend a couple of minutes adding in the insured’s details. We’ll get back to you with a quote. You can then bind the policy right there through the same online portal.

About Distinguished Programs

Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with specific expertise in Fine Art and Collectibles, Environmental and Construction Professional, Executive Lines, Inland Marine, Real Estate & Builder’s Risk, Community Associations, Surety, Hotels, and Restaurants. Property and Liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished’s high-limit Umbrella programs remain the clear choice in its area of specialty for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.

View a full list of our programs and submit business with Distinguished.

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