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Insurance · Commercial Property

What is 'builders risk' coverage?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

Property coverage for a building under construction — protecting the structure, materials, and equipment on site from covered perils while the project is being built

  1. A Property coverage for a building under construction — protecting the structure, materials, and equipment on site from covered perils while the project is being built
  2. B Auto coverage for construction vehicles
  3. C Workers' comp for builders
  4. D Liability coverage for construction companies

Why this is the answer

Builders Risk is a specialized property coverage for structures under construction. It covers: the building being constructed; materials and supplies on site or in transit for the project; temporary structures (scaffolding, equipment sheds). Coverage is typically on a 'reporting form' where the limit increases as construction progresses and the insured reports the completed value monthly. Coverage ends when the building is complete and occupied or sold. Key parties with insurable interest: the property owner; the general contractor; subcontractors. Inland marine classification — builders risk is technically an inland marine line despite covering stationary property under construction.
Source: Property Insurance Exam, Builders Risk Coverage

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About this topic: Commercial Property

Commercial property questions cover the building and personal property form, business income and extra expense, causes-of-loss forms, coinsurance and the commercial package policy. This is one of 11 Property Insurance questions on commercial property, each with a full explanation on a single study page.

New to this exam? Our Insurance exam guide explains the format, scoring, and how to prepare.

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