Not by state law, but it is almost universally required in practice. Most construction lenders and private investors mandate Builders Risk coverage before releasing funds, and local permitting authorities often require evidence of insurance before approving a project. General contractors frequently require property owners to carry it, and owners in turn require it of their GCs. Even when not contractually required, any party with a financial interest in the project-owner, developer, lender-has strong reason to secure it independently.

Typically the property owner or developer is the named insured, with the general contractor and any construction lender named as additional insureds or loss payees. Subcontractors may be included depending on the policy form and contract requirements. It's important to align the named insureds with your loan agreement and construction contracts before the policy is bound-gaps here are a common source of coverage disputes at claim time.

The limit should equal the completed value of the project-the total cost of construction including labor, materials, and soft costs-not the land value or current structure value. For a renovation, the limit should reflect the completed value of the entire structure after work is done, not just the renovation budget. Underinsuring is one of the most common and costly mistakes on Builders Risk policies; if the completed value exceeds the limit at the time of a loss, you may be subject to a coinsurance penalty or simply recover less than the actual loss.

Theft by outside parties is generally covered. Theft by employees, contractors, or subcontractors working on the project is typically excluded under most standard Builders Risk forms-this is a common gap that surprises owners after a loss. In Alabama, copper wire and HVAC equipment are frequent targets. If employee or contractor dishonesty is a concern, a Crime or Fidelity endorsement may be available separately. Always review the theft exclusions in your specific policy form before assuming coverage.

Yes-renovation, remodeling, and tenant improvement projects are eligible as long as an insurable interest exists. However, coverage for existing structures incorporated into the renovation scope must be specifically included; many standard Builders Risk forms cover only new construction unless an endorsement extends coverage to the existing building. For Alabama's older structures, verifying that existing-structure coverage is included is especially important before work begins.

Not by default. Flood, hurricane wind, and named storm deductibles are standard exclusions or require separate endorsements on most Builders Risk policies. For Alabama projects, especially coastal areas, these are significant exposures. A separate NFIP or private commercial flood policy, plus windstorm coverage, can be arranged alongside the Builders Risk policy. We assess parcel-level risk using FEMA tools to recommend appropriate add-ons for your site.

Soft costs are indirect expenses that continue or are incurred anew when a covered loss delays a project-things like additional architect and engineering fees, permit re-application costs, loan interest during the delay, real estate taxes, and pre-leasing costs. They can add up quickly on large developments. Soft cost coverage is optional and must be specifically endorsed onto the policy, with its own sublimit. If you have significant carrying costs, financing obligations, or pre-lease commitments tied to a completion date, soft cost coverage is worth including.

Coverage typically begins when construction commences-or when materials are first delivered to the site, depending on the policy-and ends at the earliest of: project completion, occupancy of any portion of the building, the policy expiration date, or the date the owner accepts the property. It's critical to notify the carrier when the project is substantially complete or when occupancy begins, as coverage under the Builders Risk policy ends at that point and a permanent property policy (homeowners, dwelling fire, or commercial property) needs to be in place. For projects that run over schedule, most carriers allow extensions-request one before the expiration date.

Yes, most carriers allow term extensions for ongoing projects, typically in 3- or 6-month increments, subject to underwriter approval and an additional premium. Extensions are not automatic-you need to request one before the current policy expires. Construction delays are common in Alabama due to permitting timelines, supply chain issues, and weather, so building in some scheduling buffer when setting the initial policy term is good practice. Contact us as soon as you anticipate a delay so we can process the extension before there is any lapse.

No-they cover entirely different exposures. Builders Risk covers physical damage to the project itself (the structure, materials, and equipment). General Liability covers bodily injury or property damage to third parties arising from construction operations-a visitor injured on-site, damage to a neighboring property from your work. Workers' Compensation covers injuries to employees. All three are typically required on a construction project in Alabama. We can bundle Builders Risk with GL and Workers' Comp for simplified administration and complete protection.