Does Builder’s Risk Insurance Cover Theft?

Builder’s risk insurance provides specialized protection for construction projects, safeguarding structures, materials, and equipment during the building process. This coverage helps mitigate financial losses from various unexpected events. A common concern for those involved in construction is whether these policies extend to cover theft, a risk frequently encountered on job sites.

Core Components of Builder’s Risk Coverage

Builder’s risk insurance, sometimes referred to as course of construction insurance, protects a building or structure while it is under construction. This specialized property insurance typically covers the physical structure, as well as materials, supplies, and equipment intended for installation. Coverage generally applies to items located on the construction site, in transit to the site, or temporarily stored at other locations. Policies often protect against perils such as fire, lightning, windstorm, hail, explosions, and vandalism.

Understanding Theft Coverage in Policies

Builder’s risk insurance policies frequently include coverage for theft, recognizing the common risk of materials and equipment being stolen from construction sites. This coverage typically applies to building materials, fixtures, and equipment intended to become a permanent part of the structure. For instance, if copper wiring, lumber, or installed appliances are stolen, a policy may provide financial protection for their replacement. The application of theft coverage usually depends on specific conditions outlined within the policy, often requiring the property was on the construction site at the time of theft and sometimes evidence of forced entry. This helps distinguish theft from mysterious disappearance, where no clear evidence of a crime exists.

Specific Theft Exclusions and Limitations

While builder’s risk policies often include theft coverage, certain types of theft or property may be specifically excluded or have limitations. A common exclusion is employee theft, meaning losses due to dishonesty by workers or contractors are generally not covered. For protection against such internal incidents, a separate fidelity bond or employee dishonesty coverage is usually required. Theft of contractors’ tools and equipment, particularly smaller, portable items not intended for permanent installation, is also often excluded, typically requiring a separate inland marine policy. Policies may not cover mysterious disappearance or property left unsecured or stored off-site without a specific endorsement.

Expanding Theft Protection Through Policy Adjustments

Policyholders can proactively enhance their theft protection by carefully reviewing their builder’s risk policy and considering specific adjustments. Adding endorsements to a standard policy allows for customized coverage that addresses unique project risks. Endorsements can extend protection to materials stored off-site or those in transit, which might not be covered under a basic policy. For high-value materials or specialized equipment, specific endorsements may be necessary to ensure their proper valuation and coverage in the event of theft. It is important to discuss the project’s particular needs, including the nature of materials, storage locations, and transit requirements, with the insurance provider or broker.

Steps for Reporting a Theft Claim

When a theft occurs on a construction site, prompt action is necessary to facilitate a claim. The first step involves immediately contacting local law enforcement to report the incident and file a police report. This report serves as official documentation of the crime, which is typically a requirement for any insurance claim. Following notification to law enforcement, the insurance carrier should be contacted without delay to report the loss. It is important to document the stolen items comprehensively, including photographs of the scene, a detailed inventory of missing materials or equipment, serial numbers, and purchase receipts. Preserving the scene, if safe and possible, until it can be investigated by authorities or the insurer can also be beneficial. Cooperation with the insurer’s investigation by providing all requested information and documentation helps ensure a smooth claims process.