Starting a construction project without the right insurance coverage is like building a house without a foundation. Home builders insurance protects both contractors and property owners involved in the construction process from unexpected financial losses.
Whether you’re a licensed contractor taking on your first major build or a property owner serving as your own general contractor, understanding the insurance requirements before breaking ground can save you from costly mistakes and legal complications.
Those working in the construction industry face significant risks. According to the U.S. Bureau of Labor Statistics, the construction industry reported 1,075 fatal work injuries in 2023, highlighting the importance of proper coverage. These are the essential types of home builders insurance, the compliance requirements, and a guide to help you determine which policies you need before your project begins.
Essential Coverage Types for Home Builders
General Liability Insurance
General liability insurance acts as a fundamental layer of protection for construction projects. This coverage safeguards against third-party claims for bodily injury and property damage as a result of construction activities. If a visitor stumbles over construction materials or if debris harms a neighbor’s property, general liability insurance will cover legal costs, medical expenses, and settlements.
Most construction contracts require proof of general liability insurance before any work can begin. The standard policy typically provides $1 million per occurrence and $2 million aggregate coverage, though larger projects may demand higher limits.
Builder’s Risk Insurance
Builder’s risk insurance provides property coverage specifically designed for structures in the process of being built. Unlike standard property insurance, this specialized policy protects buildings, materials, and fixtures during construction. Coverage starts as soon as materials arrive at the construction site and continues until project completion.
Builder’s risk policies can be purchased by contractors, property owners, or developers, depending on who holds the insurable interest in the project. The coverage amount should reflect the completed value of the structure, not the land value.
Workers’ Compensation Insurance
Workers’ compensation insurance is required in the majority of states for companies that have employees. Each state sets its own requirements and regulations for workers’ compensation coverage. According to the U.S. Department of Labor, these state-mandated programs provide benefits for medical care, rehabilitation, and lost wages when employees suffer work-related injuries or illness.
Construction ranks among the most hazardous industries, making workers’ compensation particularly important for home builders. The policy provides coverage for medical care, disability compensation, and death benefits for employees who are injured while working.
Equipment and Tools Coverage
Construction equipment represents a significant investment for contractors. Equipment and tools coverage, often called inland marine insurance, protects valuable tools, machinery, and equipment used on construction sites. This encompasses a wide range of items, including power tools, scaffolding, and heavy equipment such as excavators and bulldozers.
Standard builder’s risk policies typically don’t cover contractor-owned equipment, making separate coverage necessary. This insurance protects against theft, damage, and loss whether the equipment is on-site, in transit, or stored at your facility.
Why Proper Coverage Matters
Compliance and Contractual Requirements
Most construction projects require specific insurance coverage before work can legally begin. General contractors must provide certificates of insurance to property owners, and subcontractors must provide proof of coverage to general contractors. The Small Business Administration emphasizes that proper insurance is essential for meeting contractual obligations and protecting business assets.
Meeting these requirements demonstrates professionalism and financial responsibility, making it easier to secure contracts and build long-term client relationships. Neglecting to uphold adequate insurance can lead to contract terminations, legal repercussions, and harm to your business’s reputation.
Financial Protection and Project Continuity
Construction projects face numerous risks that can quickly drain resources. Material theft or vandalism can cost thousands in replacement expenses, weather damage can destroy months of work, and accidents can result in million-dollar lawsuits.
Home builders insurance ensures that these setbacks don’t become business-ending disasters. With proper coverage, you can replace damaged materials, repair structures, and compensate injured parties without depleting your operating capital.
Determining Your Coverage Needs
The right insurance package depends on your project’s scope, location, and specific risks. Project size and duration affect coverage amounts and policy terms. Longer and larger projects will require greater coverage limits paired with more comprehensive protection.
The Occupational Safety and Health Administration provides guidelines for construction safety that can help builders assess their risk exposure and insurance needs. Your contractual obligations also shape insurance requirements. Review contracts carefully to identify minimum coverage limits and additional insured requirements.
Partner with Burton & Company for Complete Protection
Securing the right home builders insurance before starting your construction project protects your business, your workers, and your financial future.
Burton & Company has served Virginia’s construction community for over 100 years, helping builders find insurance solutions tailored to their project needs. Our experienced agents understand the complexities of construction insurance and work with top-rated carriers to deliver comprehensive coverage at competitive rates. We’ll review your projects, explain your options, and help you build an insurance program that provides real protection without unnecessary costs.
Contact Burton & Company online or call (888) 652-1046 to discuss your home builders insurance needs and ensure your next project starts on solid ground.
