Builder’s Risk Insurance vs. General Liability: Which Does Your Construction Business Need?

In the construction industry, protecting your business from financial loss is just as important as completing a project successfully. Two of the most common types of insurance policies for construction companies are Builder’s Risk Insurance and General Liability Insurance. While both provide essential protection, they cover different risks. Understanding these differences with Bleakley Bavol Denman & Grace will help contractors, developers, and business owners determine which type of coverage—or combination of both—is best suited for their projects.

What Is Builder’s Risk Insurance?

Builder’s Risk Insurance, also known as course of construction insurance, is a property insurance policy designed to cover buildings and structures while they are under construction. It protects against damage caused by fire, vandalism, theft, weather events, and certain other risks that could delay or derail a construction project.

What Does Builder’s Risk Insurance Cover?

• Buildings and Structures – The coverage applies to the project during construction, renovation, or remodeling.
• Materials and Equipment – Items stored on-site, in transit, or at temporary locations may be covered.
• Soft Costs – Some policies include financial losses due to construction delays, such as interest on loans, lost rental income, and legal fees.

What Builder’s Risk Insurance Does NOT Cover:

• Injuries to workers or third parties (covered under General Liability).
• Defective workmanship or design errors (which may require professional liability insurance).
• Equipment breakdowns unless specifically included in the policy.

Who Needs Builder’s Risk Insurance?

• General contractors and subcontractors.
• Property owners and developers.
• Lenders and financial institutions financing the construction.

Key Benefits of Builder’s Risk Insurance:

• Protects against costly construction delays.
• Covers materials and equipment in transit or on-site.
• Can be customized to include specific risks for unique projects.

What Is General Liability Insurance?

General Liability Insurance protects construction businesses from third-party claims related to bodily injury, property damage, and personal injury. It is considered essential for contractors and construction companies because it safeguards against lawsuits and financial losses.

What Does General Liability Insurance Cover?

• Bodily Injury – If a third party (such as a visitor or subcontractor) is injured on a construction site, general liability insurance covers medical expenses and legal fees.
• Property Damage – If a contractor accidentally damages a client’s property, the policy can cover repair or replacement costs.
• Legal Defense Costs – If your business is sued, general liability insurance helps pay for legal expenses, settlements, or judgments.

What General Liability Insurance Does NOT Cover:

• Damage to the construction project itself (covered under Builder’s Risk Insurance).
• Professional mistakes or faulty design (covered by Errors & Omissions Insurance).
• Employee injuries (covered under Workers’ Compensation Insurance).

Who Needs General Liability Insurance?

• General contractors and subcontractors.
• Construction companies and developers.
• Any business that interacts with clients, vendors, or the public.

Key Benefits of General Liability Insurance:

• Provides coverage for lawsuits, which can be financially devastating.
• Required for many contracts and state licensing requirements.
• Covers medical expenses for injuries that occur on-site.

Do You Need Both?

For most construction businesses, both policies are necessary to ensure full protection. Builder’s Risk Insurance covers the project and materials during construction, while General Liability Insurance protects against lawsuits and third-party claims. Without both, you may face significant financial exposure.

Seek Legal Assistance Today

Construction projects come with numerous risks, and having the right insurance coverage is crucial to protecting your business from financial losses. Whether you’re a contractor, developer, or property owner, understanding the differences between Builder’s Risk Insurance and General Liability Insurance can help you make informed decisions.

If you need assistance reviewing construction contracts or navigating insurance disputes, Bleakley Bavol Denman & Grace can help. Contact our Tampa Construction Litigation Attorneys today for expert legal guidance tailored to Florida’s construction laws.

Source:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0600-0699/0624/Sections/0624.604.html