Builder’s Risk vs. General Liability for Residential Contractors

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, you typically 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 is short-term property coverage for an active construction project. It’s designed to cover materials, partially built structures, and sometimes soft costs when a covered event—think fire, wind, hail, theft, or vandalism derails progress. It generally does not cover faulty workmanship, employee injuries, or flooding unless you add endorsements.

General liability is ongoing protection for your business against third-party claims: bodily injury, property damage, or advertising injury caused by your operations. It doesn’t repair your own work, and it doesn’t replace workers’ comp. But if someone trips on a hose, a ladder nicks a client’s car, or a 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

• A storm knocks over framed walls over the weekend → Builder’s risk territory.
• A homeowner’s friend tours the site, trips, and is injured → General liability claim.
• Copper or appliances disappear from the jobsite → Builder’s risk (materials that become part of the permanent structure).

These aren’t edge cases. They’re everyday issues that prove why using only one policy leaves you exposed.

What each policy usually doesn’t cover

This is where contractors get surprised. Builder’s risk often excludes flood, earthquake, and workmanship. Many tools and mobile equipment need their own coverage. General liability won’t pay to redo your own work if it fails. The fix is simple: read your declarations page, learn your exclusions, and add endorsements that match your projects, region, and risk tolerance.

Also, confirm who needs to be listed: owners, GCs, lenders, and sometimes key subs. If a claim arises, you want everyone positioned correctly from day one.

Duration and cost—without the jargon

Builder’s risk usually runs for the life of the build—from kickoff to completion/occupancy—and pricing often tracks a percentage of project value. General liability runs year-round on an annual premium, typically influenced by revenue, payroll, and trade class. Many contractors bundle policies through a single 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. They rarely protect materials and structures while they’re being installed. If you’re betting a remodel or addition on a homeowner’s policy, you’re taking an unnecessary risk.

Tools, equipment, and soft costs

Builder’s risk focuses on the structure and materials becoming permanent. Hand tools, mobile equipment, and certain soft costs (like extra interest or rental expenses) may be excluded unless you add specific endorsements or separate policies (e.g., inland marine for tools). If you rely on equipment to keep projects moving, spell your needs out with your broker.

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. Larger projects, more stakeholders, and lender requirements all make the two-policy stack—builder’s risk + general liability—standard fare. Carrying both demonstrates professionalism to clients and lenders, and prevents the delays and disputes that torpedo margins.

How Bolster strengthens your risk posture (without selling insurance)

Bolster isn’t an insurance product but it’s a force multiplier for the documentation and clarity that keep projects out of trouble.

• Crystal-clear scopes & estimates. Line items, allowances, and exclusions are easy to understand, which reduces the disputes that often morph into liability headaches.
• Change orders & selections with approvals. Every pivot is documented, priced, and approved. If a covered event causes rework or delays, your paper trail is airtight.
• Client messaging & updates in one place. Transparent communication reduces surprises and friction—key to preventing claims.
• Real-time job cost tracking. When the unexpected hits, you see the budget impact immediately and make faster, cleaner decisions.

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

Practical checklist to dial in your coverage

1. Match coverage to project type. New builds, structural additions, and lender-backed work usually demand builder’s risk alongside general liability.
2. Audit exclusions. Flood/earthquake, tools/equipment, and soft costs are common blind spots. Add endorsements where it makes sense.
3. List stakeholders correctly. Owners, GCs, and lenders confirm what’s required and document it.
4. Review annually. As revenue, crew size, and project scope grow, update limits and endorsements to match.

FAQs (for clients and your team)

1. Does general liability cover faulty work?
   No. GL addresses third-party injury or property damage, not redoing your own work.
   
2. Are my tools covered under builder’s risk?
   Often not by default. Consider inland marine or equipment endorsements.
   
3. When should builder’s risk start and end?
   Typically from the start of construction through completion or occupancy, confirm specifics with your broker.

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. Together, they form a coverage stack that lets you focus on selling, scheduling, and delivering great work.

Meanwhile, Bolster keeps your scopes sharp, your changes approved, your client communication organized, and your costs transparent, so you’re not just covered, you’re prepared. Ready to look more professional on every job? Add Bolster to your next estimate and show clients you run a tight ship from day one.