Commercial roofing projects involve significant investments in materials, labor, equipment, and building protection. During construction, unexpected events such as storms, fire, theft, vandalism, or accidental damage can create costly losses.
A builder’s risk insurance policy helps protect the project during construction by covering certain types of physical damage to the work and materials.
A common question among commercial property owners is:
Should the owner or the contractor carry the builder’s risk policy?
The answer depends on the contract structure, project delivery method, risk allocation, and industry practice. In many commercial construction projects, the owner typically purchases the builder’s risk policy, but the contract should clearly identify who is responsible for obtaining coverage and what risks are included.
What Is Builder’s Risk Insurance?
Builder’s risk insurance is a temporary property insurance policy that covers a construction project while work is underway.
It may protect against losses involving:
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Newly installed roofing materials
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Construction work in progress
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Temporary structures
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Building components
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Certain equipment and materials stored for installation
The policy generally applies during the construction period and ends after project completion or another defined milestone.
Why Is Builder’s Risk Important for Roofing Projects?
Commercial roofing projects face several risks before final completion.
Examples include:
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Hurricane damage
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Wind damage
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Fire
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Theft of materials
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Vandalism
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Accidental damage during installation
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Water intrusion during construction
A roofing contractor may have general liability insurance, but that does not usually replace builder’s risk coverage.
Who Typically Purchases Builder’s Risk Insurance?
In many commercial projects, the property owner carries the builder’s risk policy.
Reasons include:
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The owner has an insurable interest in the building
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The owner controls the overall project investment
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The owner can maintain coverage from design through completion
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The owner can coordinate coverage with existing property insurance
However, some contracts require the contractor or design-builder to obtain the policy.
The important issue is not only who purchases the policy, but how the contract allocates responsibility.
Option 1: Owner Carries Builder’s Risk
This is common in many commercial roofing projects.
Advantages
Owner Controls Coverage
The owner can ensure the policy provides appropriate protection.
Better Coordination With Existing Insurance
The owner may coordinate builder’s risk with:
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Existing property insurance
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Business interruption coverage
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Risk management programs
Reduced Contractor Insurance Burden
The contractor does not need to include builder’s risk costs in pricing.
Owner Responsibilities
The owner should confirm:
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Coverage limits
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Deductibles
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Covered events
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Policy duration
Option 2: Contractor Carries Builder’s Risk
Some projects require the contractor to provide builder’s risk coverage.
This may occur with:
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Turnkey construction agreements
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Certain private commercial contracts
Advantages
Single Responsible Party
The contractor manages project insurance.
Easier Coordination
The contractor may coordinate:
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Construction activities
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Materials
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Insurance requirements
Potential Concerns
Owners should verify:
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Policy limits
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Coverage exclusions
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Named insured status
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Claims procedures
The owner should not assume contractor coverage automatically protects the building owner.
What Should the Contract Specify?
A roofing contract should clearly define:
Who Purchases the Policy
The agreement should identify:
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Owner
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Contractor
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Design-builder
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Other responsible party
Coverage Requirements
The contract should specify:
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Coverage amount
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Deductible limits
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Covered losses
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Effective dates
Named Insured Parties
The contract should identify who is protected under the policy.
Possible parties include:
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Owner
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Contractor
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Subcontractors
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Lenders
Responsibility After Damage
The contract should explain:
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Who files claims
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Who pays deductibles
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Who manages repairs
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How schedule impacts are handled
How Do Hurricanes Affect Builder’s Risk in Florida?
Florida roofing projects require special attention because hurricanes can damage work before completion.
Contracts should address:
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Storm preparation responsibilities
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Temporary protection requirements
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Deductible responsibility
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Repair procedures
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Schedule extensions after storms
Example:
A hurricane damages newly installed roofing materials before project completion. The contract should define whether builder’s risk insurance responds and who coordinates repairs.
Builder’s Risk vs. General Liability Insurance
These policies serve different purposes.
Builder’s Risk
Typically covers:
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Damage to the construction project
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Materials
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Work in progress
General Liability
Typically covers:
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Third-party bodily injury
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Third-party property damage claims
A contractor may need both types of coverage.
What Should Property Owners Ask Before Starting a Roofing Project?
Owners should ask:
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Who provides builder’s risk coverage?
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Does the policy cover roofing materials?
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Are hurricane losses included?
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Who pays the deductible?
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Are subcontractors covered?
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When does coverage end?
These questions help avoid gaps in protection.
Common Mistakes to Avoid
Assuming Contractor Insurance Covers Everything
General liability does not replace builder’s risk.
Not Reviewing Policy Terms
Coverage exclusions can create unexpected risks.
Failing to Coordinate Insurance Responsibilities
Multiple insurance policies can create confusion if responsibilities are unclear.
Ignoring Weather Risks
Florida projects require careful storm planning.
Frequently Asked Question
Should the owner or the contractor carry the builder’s risk policy?
In many commercial roofing projects, the owner typically carries the builder’s risk policy because the owner has the primary financial interest in the building and construction investment. However, some contracts require the contractor or design-builder to provide the coverage. The roofing contract should clearly define who purchases the policy, required coverage limits, named insured parties, deductibles, and responsibilities after damage occurs.
For commercial roofing projects, clearly assigning builder’s risk responsibilities helps protect the building investment, reduce insurance disputes, and ensure proper coverage during construction.
Related Questions
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- Who owns leftover materials at project completion?
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