Eighty percent of California homes built between 2020 and 2022 sit in areas the state rates as high fire risk, up from just 28 percent of homes built in the 1920s, according to Planetizen’s coverage of Los Angeles Times reporting. 

A framed structure mid-project, with exposed lumber, stacked materials, and no functioning fire suppression, is more vulnerable than the finished home it will become. Old Harbor Insurance writes builders risk insurance in California around that exposure window, covering the project as it’s being built rather than the finished building most policies are designed for.

A builders risk policy runs only for the length of a project, and the wrong term, limit, or endorsement can leave months of framing, stored materials, or a stalled renovation uninsured. Getting the terms and limits right before a permit is pulled takes one conversation; unwinding a coverage gap after a fire or theft takes a lot longer.

What Builders Risk Insurance Covers in California

A builders risk policy is built around the structure under construction, not the finished building a standard homeowners or commercial property policy expects. Coverage follows the project through four stages: materials before installation, the structure as it’s built, temporary structures on-site, and the soft costs tied to a delay.

Coverage Type What It Addresses
Structure under construction Framing, roofing, and installed systems damaged by fire, wind, or other covered perils
Materials and supplies Items on-site, in transit, or in temporary storage before installation
Scaffolding and temporary structures Fencing, scaffolding, and temporary site offices
Debris removal Clearing damaged materials after a covered loss
Soft costs Additional interest, taxes, and lost rents tied to a covered delay

Materials, Fixtures, and Equipment On-Site and In Transit

Lumber, cabinetry, fixtures, and appliances staged for installation are covered whether they sit on the job site, in a contractor’s truck, or in a nearby storage unit awaiting delivery. 

On a custom project, that transit coverage is what protects imported stone or specialty windows sitting in a supplier’s warehouse for weeks before installation. Coverage for materials ends once an item is installed, at which point it becomes part of the structure itself.

Soft Costs and Delay in Completion

A fire or storm that halts a project for months doesn’t just damage lumber and drywall; it can also trigger extra loan interest, additional property taxes, and lost rental income on the finished unit. 

Soft cost coverage reimburses those delay-related expenses, which is why lenders financing larger projects typically require a builders risk policy bound at closing, before construction begins. A builders risk policy without a soft cost endorsement pays for the physical damage alone, not the delay costs it causes.

What Builders Risk Insurance Does Not Cover

Faulty workmanship, design errors, and normal wear are excluded unless they cause a separate covered loss, such as a subcontractor’s error that starts a fire. When that happens, the claim gets handled like any other property loss: the fire damage gets paid, the workmanship problem that caused it does not. 

A contractor’s own tools usually fall outside a builders risk policy and need a separate equipment floater, and earthquake and flood are excluded by default unless added as endorsements.

Why California Construction Projects Face Distinct Risk Considerations

Wildfire Exposure During Framing and Construction

A framed structure has none of the ember-resistant vents, enclosed eaves, or fire-rated roofing that will protect it once construction wraps, part of why builders risk carriers price wildfire exposure separately from a standard property policy. 

A project that runs through peak fire season, roughly late summer into fall across most of the state, often faces tighter underwriting or a wildfire-specific sublimit, so flagging the construction timeline to the carrier at the quote stage beats finding out after binding.

Theft and Vandalism on Active Job Sites

Construction site theft costs an estimated $1 billion to $4 billion a year in stolen materials, tools, and equipment nationally, adding 5 to 20 percent to the cost of building a typical subdivision home, according to research compiled by Arizona State University’s Center for Problem-Oriented Policing. 

The most vulnerable window often falls after windows and doors are installed but before anyone moves in, when appliances and fixtures sit unsecured. Builders’ risk covers theft, though many carriers require minimum site security by that point.

New Construction vs. Renovation Coverage

Ground-Up Construction Policies

A new-build policy starts at the foundation and runs through final inspection, with limits set to the total contract value or projected completion cost. Because the entire structure is new, there’s no existing building value to separate out, simplifying underwriting compared to a renovation.

Adding Builders Risk to a Renovation or Remodel

A standard homeowners or commercial property policy usually excludes damage tied to active construction once a remodel goes beyond cosmetic work, such as an addition or structural changes, so the project needs its own builders risk policy or endorsement layered on top of existing coverage. 

California’s updated building energy code took effect for permits filed on or after January 1, 2026, and a renovation that triggers full compliance can raise rebuild costs beyond what an older policy anticipated, according to the California Energy Commission. A renovation policy’s limit needs to reflect those requirements, not the home’s original construction cost.

How Much Does Builders Risk Insurance Cost in California?

Premiums are driven mainly by the total project value, construction type, duration, and location, since a wood-frame home in a high fire hazard zone prices differently than a commercial site in a low-risk area. Deductibles and any theft, earthquake, or soft cost endorsements move the price further.

Builders risk insurance is a separate purchase from the $25,000 contractor license bond the state requires, a distinction that trips up some first-time owner-builders. The bond protects clients from license violations and unpaid wages; it does nothing for a fire, theft, or storm loss on the project itself.

How Old Harbor Insurance Helps

Some carriers have stopped writing builders risk altogether in higher fire hazard zones. Old Harbor Insurance works with more than 80 A-rated carriers instead of one company’s program, so the project gets shopped until a carrier that wants that risk turns up, instead of taking whatever one underwriter offers.

Agents help size soft cost and equipment floater endorsements to the project rather than defaulting to a bare-bones policy, and can extend coverage if a project runs past its original term. The agency also works with owner-builders on their first project, not just licensed general contractors.

Get Your Construction Project Properly Covered

Get a builders risk quote before the permit is finalized, since coverage needs to be in place before the first framing lumber shows up on-site. Contact Old Harbor Insurance to review coverage for a specific project, or request a quote to compare builders risk options across multiple carriers.

Frequently Asked Questions

Does builders risk insurance cover water damage from a plumbing or pressure test before final inspection?

Builders risk insurance covers water damage from a failed pressure test or plumbing leak during construction, since testing systems before final inspection is standard practice. Coverage extends to framing, subflooring, or nearby materials, not just the plumbing itself. Recording who performed the test helps support a claim if a fitting or line fails.

Is builders risk insurance legally required in California?

California does not have a statewide law mandating builders risk insurance for every construction project. Some cities and homeowners associations impose their own requirement as a condition of the building permit or architectural approval, separate from anything a lender might ask for. Checking the local permit and HOA rules clarifies whether a specific project needs it.

Does a renovation policy cover the existing structure if a fire starts in the new addition?

A renovation endorsement, not the base builders risk policy, extends coverage to the existing structure rather than just the new addition. Without it, a fire that spreads from new framing into the existing home may only be partially covered, split between the builders risk policy and the homeowner’s existing property policy. Sorting out that split when the policy is written is simpler than negotiating between two adjusters after a fire.

What happens if a construction project runs longer than the policy term?

Builders risk policies are written for a fixed term based on the expected completion date, and coverage doesn’t automatically continue if a project runs past that date. Most carriers allow an extension for an additional premium if requested before the original term expires, though a lapsed policy can be harder and more expensive to reinstate. Tracking the expiration date against the construction schedule avoids a gap.

Does builders’ risk insurance cover a project that sits idle for several months?

Many builders’ risk policies suspend or limit coverage once a project sits idle for about 90 days, the point at which The Horton Group says a carrier expects to hear how the delay will be resolved. Financing delays, permit holdups, and labor shortages are common reasons a project stalls that long. Notifying the carrier ahead of an extended pause keeps coverage options open.

Can a homeowner acting as their own general contractor get builders risk insurance in California?

Owner-builders can obtain builders’ risk insurance in California, though carriers underwrite these projects more cautiously than those run by a licensed general contractor. The state’s owner-builder disclosure requirements exist partly because unlicensed or inexperienced building has historically driven more claims. An independent agent can identify which carriers are comfortable writing coverage for a specific owner-builder’s project.

Does builders’ risk insurance cover a modular or prefabricated structure while it’s being transported to the site?

A modular or prefabricated structure built off-site is usually covered under a builders risk policy’s transit provision while it’s trucked to the site, the same way loose materials are covered before installation. That coverage shifts once the module is set on the foundation and becomes part of the main structure. Confirming who holds risk of loss during the move, the manufacturer or the buyer, closes the gap between the factory and the foundation.