Builder’s Risk Insurance Explained for NC Projects

Construction projects in North Carolina come with significant financial risk, whether you’re building a new commercial facility, renovating an office, developing a multifamily property, or managing a large-scale agricultural structure. Builder’s risk insurance—sometimes called “course of construction insurance”—is one of the most important tools available to protect your investment before the project is complete. At Snipes Insurance, we work with contractors, developers, property owners, and lenders across the state to make sure they have the right coverage in place from day one.

What Is Builder’s Risk Insurance?

Builder’s risk insurance is a specialized type of property insurance designed to cover buildings and materials while a structure is under construction, renovation, or repair. It protects against losses caused by events such as fire, theft, vandalism, certain weather-related damages, and accidental occurrences that can delay or increase the cost of a project.

This coverage can apply to a wide range of project types—commercial buildings, tenant improvements, custom homes, agricultural structures, coastal developments, and more. It is typically purchased by the property owner, contractor, or developer and is often required by lenders before construction begins.

Why Builder’s Risk Insurance Matters

Construction is expensive—and vulnerable. Without builder’s risk insurance, a single incident could lead to major financial setbacks, contractual disputes, or delays that affect multiple parties. Here’s why this protection is so critical:

Financial Protection: Materials, equipment, and unfinished structures can cost hundreds of thousands—even millions—of dollars. Accidental losses or damage could be devastating without proper insurance.

Legal and Contractual Requirements: Many contracts and loan agreements require builder’s risk coverage as a condition of the project. Without it, you may face delays, penalties, or canceled agreements.

Project Continuity: A covered claim helps keep your project on track and prevents unexpected costs from snowballing.

Protection for All Parties: Owners, contractors, subcontractors, and lenders all have interests in a construction project. Builder’s risk insurance helps ensure everyone has a layer of financial security.

Key Components of Builder’s Risk Insurance

Builder’s risk policies are customizable based on the type of project, materials involved, and risk exposures. While no two construction projects are exactly alike, most policies include several essential elements:

1. Covered Property

Policies typically cover the following:

- The structure under construction or renovation
- Materials, supplies, and equipment onsite
- Materials in transit
- Materials stored offsite but designated for the project

2. Covered Causes of Loss

Common covered events include:

- Fire
- Lightning
- Wind and hail (coverage for coastal counties may vary)
- Theft
- Vandalism
- Explosion
- Certain water damage events
- Accidental damage caused during construction

Because North Carolina has a wide range of weather exposures—especially in coastal regions—policy design is important to ensure appropriate protection.

3. Exclusions

Builder’s risk insurance does not cover every scenario. Common exclusions include:

- Employee theft
- Normal wear and tear
- Mechanical breakdowns
- Faulty design, materials, or workmanship (though endorsements can add some protection)
- Flood or earthquake damage without added riders

4. Policy Duration

Builder’s risk policies last for the duration of a construction project—usually 3, 6, 9, or 12 months—with the ability to extend if needed. Coverage typically ends when:

- The project is complete
- The structure is occupied
- The owner accepts the project

5. Soft Costs and Additional Coverages

Many projects benefit from additional coverage options, such as:

- Lost rental income
- Extra interest expense
- Professional fees related to delays
- Permit and legal fees
- Debris removal
- Testing of building systems

Practical Scenarios in North Carolina Construction

Builder’s risk insurance applies to real-world situations we see every day across North Carolina, from rural agricultural builds to growing urban developments. Here are some common examples:

Scenario 1: Theft of Copper Wiring or HVAC Units

Theft is one of the most frequent builder’s risk claims, especially during early phases before security systems are installed. A contractor may arrive on Monday morning to discover HVAC units or copper wiring missing—representing thousands in losses.

Scenario 2: Storm Damage During Construction

North Carolina’s weather shifts quickly, and high winds or hail can severely damage materials or partially completed structures. Without builder’s risk coverage, the cost of replacement materials falls directly on the contractor or owner.

Scenario 3: Vandalism to an Unprotected Job Site

Graffiti, broken windows, or intentional damage can delay a project and increase labor costs. Builder’s risk coverage steps in to help cover repairs.

Scenario 4: Fire During Renovation of a Commercial Building

Renovations—especially in older buildings—can pose increased fire risks. A policy can help cover structural repairs, materials, and debris removal.

Scenario 5: Water Damage From a Burst Pipe

Even during construction, plumbing systems may be partially installed. A burst pipe could damage framing, drywall, electrical components, and materials stored nearby.

Common Challenges Clients Face

Builder’s risk insurance is essential, but navigating it can be confusing. Many clients experience similar challenges, including:

1. Unclear Responsibilities Between Parties

Contractors, subcontractors, and owners sometimes assume the other party has purchased coverage. Miscommunication can leave critical exposures uninsured.

2. Gaps in Coverage

Without careful policy design, clients may overlook items such as materials in transit, temporary structures, scaffolding, or property stored offsite.

3. Coastal Restrictions

In coastal counties, wind and hail coverage may be limited or require specialized endorsements. This can result in unexpected exclusions if not addressed early.

4. Project Delays

When construction extends beyond the original timeframe, coverage may lapse if not renewed or extended proactively.

5. Misunderstanding Soft Costs

Many clients do not realize that delays can incur additional financial losses beyond materials and labor. Without soft cost coverage, these expenses usually come out of pocket.

How Snipes Insurance Helps

At Snipes Insurance, we understand the risks that North Carolina builders, contractors, and property owners face every day. With decades of experience supporting commercial clients, agricultural operations, and coastal developments, we help tailor builder’s risk coverage to the unique needs of your project.

Here’s how we support you:

Personalized Project Assessment: We review project scope, materials, location, and timeline to ensure the policy fits your real-world exposure.

Clear Communication: We help determine who—contractor, owner, or developer—should purchase coverage to avoid gaps or duplicate costs.

Coastal Expertise: With offices in Raleigh, Dunn, Morehead City, and Roanoke Rapids, we understand the complexities of coastal construction risks.

Lender-Ready Documentation: We help ensure policies meet bank or investor requirements to avoid project delays.

Ongoing Support: If your project timeline shifts, we update your coverage so there are no lapses during construction.

Claims Guidance: Should something go wrong, we support you through the claims process to minimize delays and financial impact.

Ready to Protect Your Next Project?

Build With Confidence—Start With the Right Coverage

Every construction project carries risks, but you don’t have to manage them alone. Our team at Snipes Insurance is here to help you protect your investment with tailored builder’s risk coverage built for North Carolina’s unique construction landscape.

Whether you're starting a commercial development, updating an existing facility, expanding an agricultural operation, or breaking ground on a new coastal build, we’re ready to support you every step of the way.

Visit www.snipesinsurance.com or call us at (910) 892-2121 to get started. We’re here to help you build with confidence and keep your project moving forward.