Builders Risk Insurance vs. General Liability Insurance for Contractors

Q: Can Builders Risk insurance cover theft of tools?

Usually only if the tools are part of the construction project. Separate tools often require a Contractors Equipment Policy.

Mark Vincent Ellema
4 days ago
3 min read

Split scene: left, construction site, fire, worker with plans; right, office, worker with clipboard, man falling. VS shield center.

As a contractor, protecting your business from financial risk is critical. Two common types of insurance—Builders Risk Insurance and General Liability Insurance—are often confused, but each serves a very different purpose. Understanding the distinctions can save your business from costly mistakes and legal headaches.

In this guide, we’ll break down what each policy covers, how they differ, and why most contractors need both.

What Is Builder's Risk Insurance?

Builder's Risk Insurance, also called Course of Construction Insurance, protects buildings under construction. It covers physical loss or damage to a project caused by:

Fire
Theft
Vandalism
Weather-related events like wind or hail

Builder's Risk policies generally cover materials, equipment, and structures at the construction site until the project is completed. However, they usually do not cover liability claims, such as injuries to third parties.

For a more detailed overview, check out the Insurance Information Institute’s guide on Builders Risk Insurance.

What Is General Liability Insurance?

General Liability Insurance (GL) protects your business from financial loss related to claims of bodily injury, property damage, and personal or advertising injury. Examples include:

A visitor slipping on your construction site
Damage to a client’s property
Legal defense costs if someone sues your business

Unlike Builders Risk, General Liability does not cover damage to the construction project itself. Its main focus is protecting your business’s legal and financial health.

Key Differences Between Builder's Risk and General Liability Insurance

Feature	Builders Risk Insurance	General Liability Insurance
Covers property under construction	✅ Yes	❌ No
Covers completed structures	❌ Only if the policy includes completed value	❌ No
Covers third-party injury	❌ No	✅ Yes
Covers equipment/materials on-site	✅ Yes	❌ No
Policy duration	Temporary (construction period)	Ongoing coverage
Typical cost	1–4% of the total construction cost	Varies by business size, industry, and claims history

Why Contractors Often Need Both

For contractors, relying on only one type of insurance can leave major gaps. For example:

If a fire damages a building under construction, Builders Risk covers the loss, but GL insurance won’t.
If someone is injured on your job site, GL insurance covers medical and legal expenses, but Builders Risk won’t.

Having both ensures comprehensive protection, covering both the project and potential liability.

Tip: Contractors with multiple active projects might also consider a Contractor's Equipment Insurance policy to cover tools and machinery.

How to Choose the Right Coverage

Assess Your Risk: Determine the size, scope, and location of your projects.
Understand Project Contracts: Some contracts require specific coverage levels.
Bundle Policies: Many insurance brokers offer package policies like a Business Owner’s Policy (BOP) that combine GL with other coverage.
Consult an Insurance Broker: A licensed broker like Insure Connecticut LLC can evaluate your business needs and help tailor coverage.

If you are a contractor in Connecticut, you can get personalized guidance on Builders Risk and General Liability insurance by contacting us at (860) 970-0977

Both Builders Risk Insurance and General Liability Insurance play essential but different roles for contractors. Builders Risk protects the project itself, while General Liability shields your business from lawsuits and injuries. Together, they form a safety net that keeps your business secure and your clients confident.