Can Both the Contractor and Property Owner Be Named Insureds on a Builder’s Risk Policy?

Note: Distinguished Programs no longer offers Builder’s Risk or Vacant Building insurance. Explore our other programs for tailored solutions.

Builder’s Risk Insurance covers property during the course of construction, whether it’s a new build or renovation. One common question is whether the contractor and the property owner can be named insureds on the same Builder’s Risk policy. The answer lies in both parties’ financial interest in the property and how that impacts the insurance policy’s structure.

Financial Interest and Named Insureds

In a typical Builder’s Risk policy, the named insured is the entity that has a financial interest in the construction project. This could be the contractor, developer, or property owner, depending on who stands to suffer a financial loss if the property is damaged during construction. In many cases, both the contractor and the property owner have financial stakes, allowing flexibility in how they are covered under the policy.

• Contractor’s Role as Named Insured: When the contractor is the named insured, it holds primary coverage for the physical property under construction. However, it will not be covered for liability claims under a Builder’s Risk policy since that policy is not designed to cover the contractor’s operations, such as poor workmanship or negligence. Instead, a contractor’s operations liability should be covered by a separate Contractor’s General Liability policy.

• Property Owner’s Role as Additional Insured: The property owner can often be added as an additional insured on the Builder’s Risk policy, provided the owner has a financial interest in the project. In this case, the owner is covered for the physical damage to the property (e.g., damage to the structure under construction).

Property owners may also choose to add Premises Liability coverage to the policy. This covers accidents on the property, like third-party injuries, but not the contractor’s operational errors.

Whether the contractor or property owner purchases the Builder’s Risk policy depends on the project and the agreements between both parties. Often, the contract specifies who is responsible for obtaining the policy.

Distinguished’s Builder’s Risk Policy

Our Builder’s Risk policy covers building costs, foundations, onsite materials, off-site materials in transit, fixtures, equipment, and temporary structures like scaffolding. It protects against 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.

We provide up to $20 million in limits, depending on the construction type and state. Policy terms are 3, 6, 9, or 12 months.

Our Builder’s Risk program can also be designed to cover soft costs in the event of a loss. Soft costs are reasonable and necessary expenses incurred during the construction, erection, or fabrication of a building/structure, in addition to the costs that would have been incurred if there had been no direct physical loss. For example, this could include advertising and design fees, professional fees, lease administration expenses, and additional real estate taxes and assessments incurred when construction is delayed.

Getting Coverage for Your Clients Is Easy with Our Online Portal

You can use our online portal to get your client a quote. 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, 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.

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