Can a Building Be Occupied During Construction?

Although home renovations have dropped in 2024 compared to last year, renovation spending is on track to reach $450 billion this year. Some of these renovations are small-budget remodeling projects, while others involve full-blown structural changes. On the commercial side, property owners and tenants are reimagining offices to accommodate flexible and agile workspaces, digital integration, health and safety measures, and collaborative spaces. In addition, office space is being converted to living space.

Many wonder if they can remain in their space while renovations occur at a home, office, shopping center, or other types of property. Will a Builder’s Risk policy provide coverage if the building is occupied during construction? It depends.

First, let’s take a look at what Builder’s Risk insurance offers.

What Does a Builder’s Risk Policy Cover?

A Builder’s Risk policy provides Property insurance for residential and commercial structures under construction or undergoing renovation. It covers physical loss or damage due to fire, lightning, hail, wind, theft, and vandalism, among other perils. In addition to physical damage or loss, a policy can be designed to reimburse an insured for taking protective measures resulting from the damage, such as debris removal and pollutant cleanup.

The policy provides temporary coverage, typically for three, six, nine, or 12 months, and protects an individual’s or organization’s insurable interest in the cost of construction and the materials, fixtures, and equipment used on the project. It also covers temporary structures used on the premises.

Distinguished Programs Builder’s Risk policy is unique in that it also provides General Liability insurance up to $1 million/$2 million as long as the named insured is the owner, trust, or lender – not the GC or developer (except inNew York).

Can You Remain in the Home or Commercial Space During Renovations?

If the residence is a single-family home, the occupants cannot remain in the house during renovations for coverage to be available under Distinguished’s Builder’s Risk policy. The same applies to a single commercial space, such as a restaurant or nail salon. 

However, if it’s a multi-unit habitational or commercial space like an office building or shopping center, up to 30% occupancy is allowed during renovations. Additional underwriting will apply to ensure that construction work doesn’t infringe on areas (common hallways, pathways) accessible to occupants. The renovation work has to be completely separate from the tenants who remain. It’s also important to note that, while our Builder’s Risk policy will provide Property coverage, Liability insurance is unavailable for occupied buildings.

What About ADUs on the Property?

Homeowners building ADUs (accessory dwelling units) attached to or as a separate structure from a single-family home can remain in the main house as long as there is not construction taking place within the house. The Builder’s Risk policy applies only to the ADU. Liability insurance will also not be available in this case.

Our Builder’s Risk Limits

We write the following construction types for new construction and remodels:

  • Frame with TIV limits up to $7.5 million
  • Fire-resistive or masonry noncombustible with TIV limits up to $20 million

TIV limits for betterments-only coverage is available up to $5 million.

We Make Getting Builder’s Risk Insurance Easy with Our Online Portal

Distinguished offers a competitively priced, comprehensive Builder’s Risk insurance program to support your marketing plans and help you boost your book of business. You can get your client a quote using our online portal. Simply register your brokerage, go to our Broker Portal, and spend a couple of minutes adding in the insured’s details, and we’ll get back to you with a quote. If your clients like what they see, you can 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, 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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