Builder’s Risk vs. General Liability for Residential Contractors

TLDR:

Builder’s risk protects the house, materials, and work-in-progress on a specific job. General liability protects your business when your operations cause injury or damage to someone else. Most residential contractors need both.

Two Policies, Two Different Kinds of Jobsite Risk

If you build, remodel, or add on for a living, you deal with two kinds of risk every day: risk to the project and risk to your business operations. That’s why residential contractors rarely choose between builder’s risk and general liability. In most cases, you carry both.

One protects the work-in-progress on-site. The other protects your company from third-party claims. Understanding where each policy starts and stops helps you close coverage gaps, win better jobs, and sleep easier at night.

The Quick Split in Plain English

Builder’s Risk (Course of Construction)

Builder’s risk is short-term property coverage for an active construction project. It’s designed to cover materials, partially built structures, and the work as it’s being installed when a covered event (think fire, wind, hail, theft, or vandalism) knocks the project backward.

It generally does not cover faulty workmanship, normal wear and tear, employee injuries, or flooding and earthquakes unless you add endorsements. In remodels, coverage for the existing structure can vary by policy form, so it’s something you confirm up front, not after something goes wrong.

General Liability (CGL)

General liability is ongoing protection for your business against third-party claims: bodily injury, property damage, and personal/advertising injury caused by your operations.

It doesn’t repair your own work just because it came out wrong, and it doesn’t replace workers’ comp. But if someone trips on a hose, a ladder scrapes a client’s car, or the neighbor’s window cracks during demo, general liability is the policy built for that.

Short version: builder’s risk covers the project. General liability covers your operations.

Real-World Examples You’ll Recognize

These aren’t edge cases. This is Tuesday.

Examples that hit Builder’s Risk

• A storm knocks over framed walls over the weekend: the structure and materials are the claim.
• Copper, appliances, or installed fixtures disappear: theft of materials intended to become part of the finished work is the classic builder’s risk scenario.
• A fire damages the work-in-progress: builder’s risk is built for this.

Examples that hit General Liability

• A homeowner’s friend tours the site, trips, and gets hurt: third-party injury.
• Dust control fails and damages a neighbor’s property: third-party property damage.
• A sub backs into the client’s retaining wall: still a third-party property damage claim (your policy and your contracts determine how that shakes out).

Using only one policy leaves you exposed in very predictable ways.

What Each Policy Usually Doesn’t Cover

This is where contractors get surprised.

Common Builder’s Risk Gaps

Builder’s risk often excludes flood, earthquake, and workmanship issues. It may also have conditions around site security, temporary heat, and vacancy/occupancy. If you’re building in a flood-prone area, working in wildfire country, or doing a high-theft urban remodel, you want endorsements and limits that match reality.

Common General Liability Gaps

General liability typically won’t pay to redo your own work if it fails. That’s the big one that gets misunderstood. It may cover resulting damage to other property, depending on the facts and policy language, but “we installed it wrong” is not what CGL is for.

Also, general liability is not workers’ comp. If a worker gets hurt, you’re in workers’ comp territory.

The fix is simple: read your declarations page, learn your exclusions, and add endorsements that match your projects, region, and risk tolerance.

Duration and Cost, Without the Jargon

How long builder’s risk lasts

Builder’s risk is tied to a specific job and typically runs from the time materials hit site through completion, occupancy, or owner acceptance (depending on the form). If the job drags or phases out, you need to confirm how extensions work so you don’t hit an expiration date mid-build.

How general liability is priced

General liability runs year-round on an annual premium, and it’s usually influenced by your revenue, payroll, and trade class. Many contractors bundle coverage through one broker to simplify renewals (and sometimes reduce total premium).

“The Homeowner Has Insurance. Do I Still Need Builder’s Risk?”

Usually, yes.

Homeowner policies are meant for finished homes, not active construction zones. Even when a homeowner has coverage, major renovations can change the risk profile, trigger special requirements, or leave gaps around materials and work-in-progress. If you’re betting a remodel or addition on a homeowner’s policy alone, you’re taking an unnecessary risk.

The clean way to handle this is to clarify, in writing, who carries builder’s risk (owner or contractor) and what exactly it covers on that project.

Tools, Equipment, and Soft Costs

Builder’s risk focuses on the structure and materials that become permanent. Your hand tools, mobile equipment, and gear in the truck often need separate coverage, commonly written under inland marine / contractor’s equipment coverage.

Soft costs can be another blind spot. Things like extra interest, re-permitting, temporary housing, debris removal, or expediting can be excluded unless you add endorsements. If a covered loss sets you back weeks, the rebuild is only part of the damage.

Why Both Policies Matter for Growth-Minded Contractors

As you move from bathrooms to additions to whole-home remodels or custom builds, your risk profile evolves fast.

Bigger projects mean more stakeholders, bigger deposits, lender requirements, and tighter timelines. Builder’s risk plus general liability becomes standard because the stakes are higher and the paper trail gets more serious. Carrying both signals professionalism to clients, lenders, and higher-end customers, and it helps prevent the delays and disputes that torpedo margins.

How Bolster Helps You Stay Out of Trouble (Without Selling Insurance)

Bolster isn’t an insurance product, but it does help with the part of risk management contractors actually control: clarity and documentation.

Where it tightens your risk posture

• Clear scopes and exclusions: fewer “I thought that was included” arguments.
• Change orders and selections with approvals: every pivot is documented, priced, and approved.
• Client messaging in one place: fewer surprises, fewer misunderstandings.
• Job cost visibility: when the unexpected hits, you see the impact immediately and make cleaner decisions.

The result is fewer disputes, fewer delays, and better records if you ever need to file (or defend) a claim.

Practical Checklist to Dial In Your Coverage

Match coverage to the job

New builds, structural additions, and lender-backed work usually demand builder’s risk alongside general liability.

Audit exclusions

Flood/earthquake, tools/equipment, and soft costs are common blind spots. Endorse what you actually need.

List stakeholders correctly

Owners, GCs, and lenders may need to be named correctly. Don’t wing this. Get it in writing.

Review annually

As revenue, crew size, and project scope grow, update limits and endorsements to match.

FAQs for Contractors (and Homeowners Who Ask Smart Questions)

Does general liability cover faulty work?

Usually not for redoing your own work. It’s aimed at third-party injury or damage.

Are my tools covered under builder’s risk?

Often not by default. Tools and equipment are commonly covered under inland marine / contractor’s equipment coverage.

When should builder’s risk start and end?

Typically when materials arrive or work begins, and it ends at completion, occupancy, or owner acceptance. Confirm the trigger points in your policy.

Bottom Line

You don’t pick between builder’s risk and general liability. You pair them. One protects the project. The other protects your business.

Meanwhile, tightening your estimating, scope clarity, and approvals process helps you avoid the kinds of disputes that turn into claims in the first place.