Builders Risk vs. General Liability: What’s the Difference?

Have you ever caught yourself scratching your head trying to find out insurance coverage for your construction business? You are not alone.

Builders risk vs. general liability insurance, these terms might sound the same, but they are miles apart. The choice of insurance coverage could cost you a lot of money if you got it wrong, so let's try to solve this challenge of insurance easily and interactively together. 

We will go to the basics, clarify significant differences, and help assist you with your decision on what best fits your project.  

What is Builders Risk Insurance?

Builders risk insurance, Also sometimes called Contractors Risks Insurance, Builders Risk Insurance is one of the most important insurance policies you need to protect the construction structure. A Builder's Risk Insurance policy will protect your investment for contractors, property owners, and developers while the construction is ongoing.

What Does Builder's Risk Insurance Cover?

A Builders Risk Insurance policy will cover the following: 

• Theft of construction materials 

• Natural disasters (fire, storms, etc.)

• Accidental damage on site 

• Machinery 

• Valuable papers and data 

• Vandalism
  
  

Simply put, it will provide financial protection in case damage occurs to the structure on site and keep your project moving.

What’s Not Covered by Builders Risk Insurance?

While builders risk insurance provides excellent coverage, it does not cover:

• Injuries to employees (this is covered by workers' compensation).

• Liability for accidents involving third parties.

• Damage that occurs after the project is complete.

• Defective workmanship and/or inexperience.

That's where general liability insurance comes in.

What is General Liability Insurance?

General liability insurance protects your business from claims related to bodily injury, property damage, and personal or advertising injury involving third parties. General liability coverage is an important part of your insurance plan, and is necessary for any construction company, contractor, or subcontractor that routinely interacts with clients, vendors, and the public.

What Does General Liability Insurance Cover?

General liability insurance for small business usually provides coverage for:

• Third-party bodily injury at or around your construction site

• Third-party property damage resulting from your work

• Legal costs and settlements for lawsuits

• Advertising injury (libel, slander, or copyright infringement)

General liability insurance protects you and your business against expensive lawsuits and potential bankruptcy resulting from accidents or negligence claims.

What’s Not Covered by General Liability Insurance?

Despite its broad protections, general liability insurance does not cover:

• Damage to your own construction projects or property

• Professional errors (requires professional liability insurance)

• Workers’ compensation claims

• Intentional acts or deliberate negligence

Builders Risk vs. General Liability: What’s the Key Difference?

Builders risk insurance protects your actual construction project from damages due to natural disasters, theft, or vandalism. General liability insurance covers third-party injuries or damages, protecting your business from related lawsuits.

Choosing the Right Construction Insurance: Builders Risk vs. General Liability ? 

Choosing the right type of insurance for your construction business is essential to protect your investments and keep your doors open. Construction projects are inherently fraught with great risk, right from the possibility of property damage and on to potential legal liabilities. Knowing your Builders Risk Insurance from your General Liability Insurance gives you the means to understand how to select policies designed specifically to your project's requirements, thus reducing your financial exposure while giving you peace of mind. Let's briefly summarize which insurance fits your needs. Let's briefly summarize which insurance fits your needs:

Builders Risk Insurance: If you are actively engaged in building, renovating, or remodeling, especially if there is considerable investment in materials and labor. This policy protects your construction site, materials, and equipment against potential perils of loss such as fire, theft, vandalism, and weather-related damages.

General Liability Insurance: If your construction business interacts regularly with clients, vendors, or the general public, this insurance is a must-have. It ensures coverage for third-party injuries or property damage and court expenses arising from accidents or negligence.

For a well-rounded Construction Insurance Coverage Comparison, it’s best to consider a combination of both policies. Builders Risk secures your investment in your ongoing projects, while the General Liability protects you against lawsuits that could prove costly.

The Bottom Line

Navigating builders risk vs. general liability insurance doesn’t have to be complicated. By clearly understanding the specific protections each provides, you’re equipped to make informed, confident decisions. Always remember, the right insurance can be the difference between business survival and a financial crisis. 

Need more help or have questions? InsureYourCompany has your back. We’re here to simplify your insurance needs, ensuring your business stays protected, secure, and ready to thrive.