When you’re building a new home, store, or big project, a lot can go wrong. Bad weather, fires, or even theft can happen before the building is done. That’s where Builder’s Risk Insurance comes in.
It’s also called “course of construction insurance.” Basically, it helps protect the project, the materials, and sometimes even the money invested, while construction is still in progress. (Buildertrend)
In simple terms: it’s insurance made for buildings that aren’t finished yet.
Why Builder’s Risk Insurance Is Important in Illinois and Missouri?
Illinois and Missouri both deal with weather that can mess with construction sites, like tornadoes, hail, and heavy rain. These storms can cause serious damage before a project is even done.
Many people think their normal property insurance will help if something goes wrong during construction — but that’s not true. Most regular property policies don’t cover damage during building or renovation.
So, if you’re building in these states, having Builder’s Risk Insurance helps protect your time, money, and hard work.
Do I Need Builder’s Risk Insurance in Illinois or Missouri?
Yes! If you’re building or remodeling a home, business, or commercial property, you likely need builder’s risk insurance coverage.
In both Illinois and Missouri, lenders often require proof of a builder’s risk policy before they release funds. Even if it’s not required, having it gives you peace of mind that your investment is safe if something unexpected happens during construction.
Think of it like this: if a fire, storm, or theft destroys part of your project, Builder’s Risk Insurance helps you rebuild without losing all your money.
What Does Builder’s Risk Insurance Cover?
A good Builder’s Risk policy usually covers:
- The building or structure that’s under construction.
- Materials and supplies on the job site, or even stored off-site but meant for the project.
- Temporary structures like scaffolding or fences.
- Damage from events like fire, wind, theft, or vandalism.
Sometimes even “soft costs” - things like extra expenses or lost income caused by construction delays.
What Builder’s Risk Insurance Does Not Cover
Even with strong insurance coverage, there are limits to what a builder’s risk policy protects.
Here’s what it usually does not include:
- Injuries to workers or visitors (those fall under liability coverage or workers’ comp)
- Tools, vehicles, or heavy equipment (these need separate insurance)
- Floods or earthquakes (these require add-on coverage)
That’s why it’s important to have a lawyer or insurance professional review your policy to make sure you’re covered for all possible risks.
Does Builder’s Risk Insurance Cover Subcontractors?
Not always, and this is a common mistake people make.
Some builder’s risk policies automatically include subcontractors under the owner or general contractor’s coverage, but others don’t. If subcontractors bring their own tools or materials, they might need separate insurance.
To be safe, make sure all subcontractors are listed as named insureds or additional insureds in the policy. That way, everyone working on the job site is protected if something goes wrong.
Who Needs Builder’s Risk Insurance?
Anyone with a financial stake in a project should have it, including:
- Homeowners building or remodeling their homes
- Builders or general contractors
- Property developers
- Subcontractors or investors
Sometimes the property owner buys it. Other times, the contractor does. The most important thing is that the contract clearly says who’s responsible for buying it.
In Illinois and Missouri, banks or lenders often require builder’s risk insurance coverage before approving project loans, protecting everyone involved.
Understanding the Construction Phase
The construction phase is the time when the building is still being built, remodeled, or repaired. This is when your project faces the highest risk, because it’s not yet finished or insured by a standard property policy.
During this stage, materials are exposed, workers are active, and the weather can easily cause damage. That’s why Builder’s Risk Insurance is specifically designed for this phase — it acts like a safety net until your project is complete.
What’s the Difference Between Builder’s Risk Insurance and Liability Coverage?
This is another common question — and it’s an important one.
- Builder’s Risk Insurance covers property damage (like fires, theft, or storms).
- Liability coverage, on the other hand, protects you if someone gets hurt or sues you during the project.
For example, if a strong wind knocks down a wall, builder’s risk helps rebuild it. But if a worker is injured by that falling wall, liability insurance covers medical bills or lawsuits. Most contractors and property owners need both to stay fully protected during construction.
Helpful Tips Before You Buy
Here are a few tips to make sure your policy gives you complete insurance coverage:
- Start coverage early. It should begin before construction starts and end once the project is done or occupied.
- Include off-site materials. If you store materials elsewhere, make sure they’re listed in your policy.
- Check who’s listed as “insured.” Property owners, contractors, and subcontractors may all need to be included.
- Understand exclusions. Ask what isn’t covered (like flooding or equipment loss).
- Review the policy value. As your project grows in value, update your coverage so you’re fully protected.
Illinois vs. Missouri: Builder’s Risk Differences
While Builder’s Risk Insurance works similarly across the U.S., there are key differences in risk for these two states:
- Missouri: Tornadoes and strong storms are common, so coverage for wind and hail is key.
- Illinois: Flooding can be a bigger issue, especially near rivers or lakes. Consider adding flood coverage if you’re building in these areas.
Also, Missouri has some unique legal rules. For example, under the state’s valued policy laws, builder’s risk coverage isn’t treated like standard property insurance. That means some claims are handled differently.
Having someone who understands local laws and insurance rules can help you avoid headaches later.
How Much Does Builder’s Risk Insurance Cost?
Wondering how much Builder’s Risk Insurance costs? It usually runs between 1% and 5% of your total construction budget.
For example, if your project costs $400,000, your builder’s risk insurance cost may range from $4,000 to $20,000 for the entire build.
The price depends on:
- Project size and value: bigger builds cost more to insure.
- Location: Missouri’s storm risk or Illinois’ flood zones can raise costs.
- Construction type: wood-frame buildings cost more than steel or concrete.
- Coverage amount and duration: more coverage or longer projects increase the price.
While it’s an added expense, this insurance can save you thousands if damage or theft happens during the construction phase. It’s one of the smartest investments for anyone building or renovating property.
Why Liability Coverage Still Matters
Even though Builder’s Risk Insurance protects the building and materials, it does not cover liability if someone gets hurt on-site. That’s why builders and property owners also need liability coverage or general contractor insurance.
Liability coverage protects you from lawsuits or medical costs if a worker or visitor gets injured during the project. Having both builder’s risk and liability insurance gives you total protection — for both property damage and accidents. Our goal is simple: protect your property, your project, and your peace of mind.
Why a Free Consultation Matters
If you’re a property owner, contractor, or developer, it’s smart to talk to someone who knows both insurance coverage and construction law, especially before something goes wrong.
We help property owners and builders across Illinois and Missouri understand their policies, review contracts, and fight for the coverage they deserve. Whether it’s builder’s risk, a denied claim, or an underpaid loss, our team can help.
Before You Build, Let’s Make Sure You’re Covered - Free Builder’s Risk Consultation
Don’t wait until it’s too late to find out what your policy really covers.
If you’re starting a construction project or renovation in Illinois or Missouri, contact Vargas Gonzalez Delombard, LLP today for a FREE consultation.
We’ll help you:
Review your Builder’s Risk Insurance policy
Explain your rights under Illinois and Missouri law
Make sure your project is protected from start to finish
Call us today or visit vargasgonzalez.com to schedule your free consultation.
Because protecting your property shouldn’t be a risk.
