Your homeowners policy covers a finished, occupied house. It stops there.

Builders risk picks up the gap during construction: the work in progress, the materials staged on site, the cabinets in the garage, the trusses on the flatbed. Most lenders require it on any real renovation or new build.

BuildersRiskNerd shops builders risk for homeowner projects in all 50 states. We are a brand of ContractorNerd Insurance Services, LLC, a licensed insurance broker (CA License #6015566).

The quick decision for most homeowners:

  • New build, addition, or renovation over 25% of home value? Carry both.
  • Cosmetic refresh or repair under $10,000? Your HO policy alone is usually fine.
  • Lender involved? They will require a builders risk certificate before releasing draws.

Start a builders risk quote →

What your homeowners policy actually covers

Your standard HO-3 form, the one most lenders require, is built around a single assumption: a finished, occupied house. Coverage A pays to repair or rebuild the dwelling. Coverage B covers detached structures. Coverage C covers your personal property. Coverage D pays for temporary housing if a covered loss makes the home uninhabitable.

That assumption shapes how the policy works at claim time. Four conditions matter during construction:

Whether the home is lived in. Most HO-3 forms require the home to be occupied. Once it sits empty for 60 straight days, your HO drops vandalism, glass breakage, and water damage from frozen pipes.

Vacancy permits. If the home will sit empty during construction, your carrier may require a vacancy permit endorsement. With one, vacancy claims pay. Without one, they don’t.

The construction sub-limit. Many HO forms include a sub-limit for the dwelling under construction. Some forms list a 30-day window. Others cap coverage at 10% of Coverage A or a flat $25,000. On a $400,000 home that is roughly $40,000 max. Enough for a small remodel. Short on an addition.

Named perils. HO-3 covers the dwelling on an open-perils basis with named carve-outs: flood, earth movement, faulty workmanship, and theft of building materials.

At claim time, the carrier defends those terms. A contractor’s torch sets framing on fire. Copper rough-in walks off during dry-in. The policy does what it was written to do. The fix is to add builders risk on top for the construction window.

The gap between HO and finished construction

The moment construction starts, the HO assumptions break. Three things change at once:

The home goes empty. Major renovations push families out. Most HO carriers treat the home as vacant after 60 days. Many drop water damage and vandalism coverage at the 30-day mark. A burst pipe in week 11 of a kitchen-and-bath gut becomes uninsured.

Construction sub-limits cap your coverage. The dwelling-under-construction sub-limit on a typical HO-3 caps coverage at 10% of Coverage A or a flat dollar figure, often $25,000. Falls short on a $150,000 second-story addition.

Materials and staged work fall outside Coverage A. Coverage A protects the dwelling itself. Lumber stacked in the driveway, cabinets staged in the garage, and roof trusses on a flatbed sit outside that line. If a thief lifts $18,000 of cabinetry the night before install, builders risk pays. HO points to the property exclusions.

Three real denial patterns we see at BuildersRiskNerd:

  1. Fire during a kitchen remodel. Contractor’s heat gun ignited insulation behind a wall. The HO carrier paid for the existing structure (occupied at time of loss) and denied the renovation work-in-progress and the cabinetry on site. A builders risk policy would have paid both.
  2. Theft of staged but unfinished rough plumbing. Copper stripped from open walls during a bath addition. HO denied as work-in-progress. Builders risk pays.
  3. Vandalism on a vacant remodel. Family moved to a rental during a six-month gut. Squatters broke in and trashed the new flooring and HVAC. HO denied for vacancy past 60 days. A builders risk policy with vacancy coverage pays.

This is why every lender on a renovation construction loan asks for a builders risk certificate before releasing draws. Wells Fargo, Chase, the credit unions, the construction-loan specialty lenders. They have all watched HO carriers deny these claims for decades.

What builders risk covers that HO doesn’t

Builders risk insurance is built for the construction phase. It picks up exactly where HO sets down:

  1. Materials on site. Lumber, drywall, fixtures, appliances, and finish materials staged on the property are covered against fire, theft, vandalism, and weather. HO covers the dwelling itself; staged materials sit outside that line.

  2. Materials in transit. Cabinets shipping from a fabricator, custom windows on a flatbed, a load of trusses en route. Builders risk picks these up while they move. HO covers the dwelling at its address; materials in transit need a separate policy.

  3. Theft of installed but unfinished work. Copper in open walls, AC condensers before they’re hooked up, brand-new appliances staged but not yet wired. Builders risk pays. HO classifies these as work-in-progress and steps aside.

  4. Damage during demo and rough phases. A demo crew taking down a wall causes water damage downstream. A roofer’s torch sets a rafter alight before sheathing goes on. These losses fall in the construction window, where builders risk takes over.

  5. Vandalism on unoccupied job sites. Most large renovations sit empty. Every new build does. Builders risk policies are written assuming the property is empty during construction. HO assumes the opposite.

A small subset of HO-3 endorsements (the ISO HO 04 48 is the most common) extends limited coverage for additions and alterations, capped at a few thousand dollars. Useful on a paint-and-flooring refresh. Short on a real project. For the deeper view of the builders risk coverage page, see our coverage page.

When HO alone is enough

Not every project needs builders risk. Small, fast, cosmetic work usually rides on your HO.

You can usually skip builders risk when:

  • The project costs less than $10,000 in total scope.
  • The work is cosmetic (paint, flooring, fixtures, cabinets in a same-footprint kitchen).
  • No structural changes (no walls moving, no foundation work, no roofline changes).
  • The home stays occupied throughout the project.
  • The project finishes in under 30 days.
  • No lender is involved, or the lender does not require a separate certificate.

Thresholds shift by carrier. Some HO carriers will quietly accept up to $25,000 in renovation work without flagging it. Others get nervous at $5,000. Section I of your HO policy spells out the dwelling and personal property coverages, and is where the construction sub-limit lives. Read it before you start.

A safer move on borderline projects: call your HO carrier before the work begins. Ask two questions. Is the work-in-progress covered, and to what limit? Will my coverage change if the home goes vacant? Get the answer in writing. If the answer is “yes but capped at 10% of Coverage A” or “you need a vacancy permit,” add builders risk. The NAIC consumer guidance on home construction backs this up.

Running both policies together

Builders risk and homeowners run side by side. Most homeowners on a major project carry both during the construction window. Most lenders expect it. That is the practical answer to the builders risk vs. homeowners insurance question on a real project.

How the two policies divide responsibility on a typical renovation:

  • HO covers the existing structure that is not being renovated, your personal property, your liability as the homeowner, and additional living expenses if a covered loss makes the home uninhabitable.
  • Builders risk covers the work in progress, materials on site and in transit, theft of unfinished installations, vandalism during vacancy, and weather damage during demo and rough phases.

A few cautions on the overlap:

Some homeowners pause their HO during major renovations to save premium. We see this at BuildersRiskNerd often enough to flag it, and we always advise against it. If a tree comes down on the existing structure during the build, builders risk covers the work in progress. The un-renovated parts of the home sit on HO. Cancel HO and that part is uninsured. The savings (a few hundred dollars over six months) rarely justify the gap.

Other homeowners think builders risk replaces HO. Builders risk covers the build. HO covers your liability and your personal property. They split the work. If a delivery driver slips on the walkway and sues, HO liability defends the claim. The NAHB guidance for homeowners managing their own remodel covers this overlap in detail.

The contract question of who carries the builders risk policy (you or your contractor) is a separate decision worth making early.

Carry both. Pay both. Cancel neither.

What happens at the end of construction

Builders risk policies end at one of three triggers, whichever comes first: the certificate of occupancy issues, the home becomes occupied, or the policy term expires. Once builders risk ends, your HO steps back into full responsibility for the home.

A few details to handle at the end of the build:

Notify your HO carrier the project is complete. They may want updated photos or a re-inspection.

Update Coverage A. If the home’s replacement cost rose during the renovation (added square footage, upgraded finishes, new systems), Coverage A needs to rise to match. An out-of-date Coverage A creates a coinsurance penalty at the next claim.

Cancel builders risk only after the CO is issued. If you cancel the day the contractor leaves but before the CO comes in, a fire on day three of the gap is uninsured.

On a major build, your carrier may issue a brand-new HO policy keyed to the post-renovation replacement value. Premium will rise to match.

Get a quote for your project through BuildersRiskNerd

BuildersRiskNerd shops builders risk for renovation projects for homeowners across the country, with admitted and non-admitted carriers in all 50 states. To get a quote, you will need:

  • Project address and scope (renovation, addition, new build)
  • Total project cost (materials and labor)
  • Construction start and expected completion dates
  • Lender name and mortgagee clause language (if financed)

Tell us those details and we will come back with quotes that match. Most homeowners get options within 24 to 48 hours. You will have a lender-ready certificate the day the policy binds.

Start your builders risk quote →

Frequently asked questions

Does homeowners insurance cover renovations?

Homeowners covers the finished, occupied dwelling. The construction work and materials staged on site sit outside that coverage. Most HO-3 forms include a sub-limit for “dwelling under construction” capped at 10% of Coverage A or roughly $25,000. Enough for a small remodel. Short of what an addition or kitchen gut needs.

Does homeowners insurance cover new construction?

Builders risk is the right policy for a ground-up build. The HO-3 form is built around a finished dwelling, which a new build is not yet. Once the certificate of occupancy issues and the home is occupied, an HO policy starts covering it.

Do I need both builders risk and homeowners insurance during my project?

Yes, on most major projects. Builders risk covers the work in progress and the materials. HO covers the existing structure that is not being renovated, your personal property, and your liability as the homeowner. They cover different things and most lenders expect both.

When does my homeowners insurance start covering my new addition?

Your HO covers the addition once construction is complete and the home is occupied. The transition is usually automatic if your HO carrier was notified of the project and Coverage A reflects the new value. Notify your carrier when the addition is done, update Coverage A, and cancel builders risk only after the CO issues.

Can I cancel my homeowners policy during construction to save money?

Skip the cancellation. Builders risk covers the build. HO covers the un-renovated parts of the home, your personal property, and your liability as the homeowner. If a tree falls during the project, builders risk pays for the work in progress. HO pays for the rest. Cancel HO and the rest is uninsured. The savings (a few hundred dollars over six months) rarely justify the gap.

Will my contractor’s general liability policy cover my project instead?

A contractor’s GL covers injuries and property damage to others, not damage to your building. If your contractor’s torch sets your framing on fire, GL pays a neighbor whose fence got damaged. The cost to rebuild your home falls on builders risk. The building under construction is what builders risk protects.

BuildersRiskNerd is a brand of ContractorNerd Insurance Services, LLC, a licensed insurance producer (CA License #6015566). All insurance products and services are offered through ContractorNerd Insurance Services, LLC. We are a broker, not an insurer. Policies are underwritten by admitted and non-admitted carriers.