Builders Risk Insurance Insurance: Average Premiums & Pricing Factors
Quick Answer
How much does Builders Risk Insurance cost? Average premiums by business size, industry, and state — plus the key factors that drive your rate up or down.
Builders risk insurance (also called construction insurance) covers buildings and structures under construction from damage due to fire, vandalism, weather, and other covered perils during the construction period — protecting contractors, property owners, and lenders.
What You Need to Know
Builders risk insurance covers property that is under construction or renovation — protecting against loss or damage from fire, wind, theft, vandalism, and other perils during the construction period. It covers the structure being built plus on-site materials, supplies, and temporary structures. Required by lenders for construction loans. Owners, general contractors, and subcontractors all have insurable interests. Premiums typically run 1–4% of the project's total hard cost annually, with a policy term matching the construction schedule.
Builders Risk Insurance Cost by Business Size
| Business Size | Annual Revenue | Typical Premium | Notes |
|---|---|---|---|
| Small Residential Project ($100K–$500K) | N/A | $1,500–$6,000 per project | Custom home or major renovation. Standard wood frame. 12-month term typical. |
| Mid-Size Commercial ($500K–$5M) | N/A | $5,000–$50,000 per project | Retail, office, mixed-use construction. Construction type and location drive rate. |
| Large Commercial ($5M–$25M) | N/A | $40,000–$200,000 per project | Major commercial or multi-family. Often requires builders risk broker with specialist markets. |
| Major Project ($25M+) | N/A | Highly variable; $150,000–$1M+ per project | Infrastructure, high-rise, complex renovation. Manuscript policy. London market often required. |
What Determines Your Premium?
- Project Value (Hard Costs) (Very High impact) — Builders risk premium is rated as a percentage of project value. A $1M project at 1.5% = $15,000. Accurate project budget is essential — undervaluing exposes coverage gap.
- Construction Type (High impact) — Wood frame construction (most residential, light commercial) is highest risk. Steel, concrete, and masonry construction are lower risk and get better rates.
- Project Location (High impact) — Coastal, flood zone, or wildfire-exposed projects require special underwriting. Theft-prone urban areas add to rates. Projects in catastrophe zones may require wind/flood endorsements.
- Project Duration (Medium impact) — Longer projects cost more (more exposure period). Projects extending beyond scheduled completion require renewal — factor in extension costs when budgeting.
- Project Type (Medium impact) — Ground-up new construction is standard. Renovation/rehabilitation projects are more complex — how much of the existing structure is exposed? Gut rehabs are more like new construction.
- Security Measures (Low-Medium impact) — Fencing, access control, site security, and camera systems are increasingly factored in builders risk underwriting — particularly for projects in high-theft-risk areas.