A contractor's annual insurance program and a specific project's program are two different problems. The annual program covers the business — people, vehicles, tools, operations. The project program covers the structure while it is being built, the promises made to the owner, and the liability that outlives the punch list. For the company-level picture, start with our contractor insurance guide. This article is about the project, where most coverage failures happen because the obligations come from the contract, not the policy.
Coverage, exclusions and limits vary by carrier and policy form. All sources linked below were verified on August 23, 2026.
Builders risk: insuring the structure mid-build
Builders risk — course of construction — is the property policy for a project that does not exist yet. IRMI defines a builders risk policy as property insurance covering property in the course of construction, usually on an all-risks basis, applying at the site and to property in off-site storage and in transit. Two structural facts matter:
- Most builders risk is written on inland marine forms, not commercial property forms, which changes the conditions, valuation language and available endorsements.
- The estimated completed value is used as the limit of insurance. Insuring to contract value instead is a common, self-inflicted builders risk error.
What it typically does not do
The defective-work carve-out is the one that surprises contractors. IRMI's guidance on buying builders risk coverage is direct: most builders risk insurers will not cover the cost of making good defective design, workmanship or materials. Ensuing loss is different — if faulty welding causes a fire, the fire damage may be insured even though the welding is not.
Catastrophe perils are a question, not an assumption. IRMI has flagged endorsement language excluding loss "caused by or resulting from Acts of God including but not limited to Earthquake, Flood, and Windstorm" and warned the phrase is often left undefined. Fix undefined exclusionary language before binding, not after a loss.
Soft costs, delay and who gets named
A physical loss produces two bills: rebuilding the damaged work, and carrying the project through the delay. The second is soft costs. IRMI identifies these as including advertising and promotional expenses, fees for renegotiating leases, additional insurance premiums, interest on construction loans, taxes and equipment rental — and notes a general contractor's general conditions keep running during a delay, sometimes at $10,000 or more per month, uncovered without the right endorsements.
Name every party with an insurable interest — owner, general contractor, subcontractors, often the lender — or expect a post-loss fight over the proceeds. Contracts usually also require a waiver of subrogation: an insurer's acknowledgment that it has no right to subrogate against a liable third party after paying a loss. Waivers must be permitted by the policy, not just the contract.
Contractual risk transfer
IRMI defines contractual risk transfer as the use of indemnity and exculpatory agreements, waivers of recovery rights, and insurance requirements to pass along to others what would otherwise be one's own risks of loss. On a project it flows downhill: owner to general contractor, general contractor to subcontractors.
It does not flow without limit. IRMI describes anti-indemnity statutes as laws restricting the scope of legal liability one party may transfer to another, commonly regulating construction, energy and transportation contracts — and notes some jurisdictions also limit requiring additional insured coverage for liabilities that cannot legally be transferred by indemnity. These statutes differ by state, so language enforceable on one project may be void on another.
Additional insured status is form-specific
An additional insured is a person or organization not automatically included as an insured who is added at the named insured's request. The critical detail is which endorsement delivers it.
| Form family | What it addresses |
|---|---|
| CG 20 10 (later editions) | Additional insured for the named insured's ongoing operations |
| CG 20 37 | Additional insured for completed operations — injury or damage occurring after the work is finished |
IRMI notes ISO changed the CG 20 10 language from "your work" to "your ongoing operations" specifically to clarify that additional insured coverage does not extend to completed operations losses. So where a contract requires completed operations status, the ongoing-operations form does not deliver it — and IRMI has called the CG 20 37 07 04 endorsement notoriously difficult to obtain. Confirm availability first.
A certificate of insurance evidences that coverages and limits were purchased. It is not the policy; only the endorsement says what a sub's status really is.
Completed operations outlives the project
IRMI defines completed operations as work completed as called for in a contract, work completed at a single jobsite under a multi-site contract, or work put to its intended use. Defect allegations surface years later, so an obligation to maintain completed operations additional insured status for a defined term generally means renewing that endorsement each policy term — and your products-completed operations aggregate is a separate bucket prior projects can exhaust.
Project-specific aggregates
A standard general liability policy carries one general aggregate for the whole policy period, so on a contractor running concurrent jobs, one bad project can consume the limit every other job relies on. IRMI describes the designated construction project general aggregate limit endorsement as modifying a CGL policy so the general aggregate applies separately to each designated project, leaving limits such as the products-completed operations aggregate unchanged. The standard ISO version is CG 25 03.
Wrap-ups: OCIP and CCIP
IRMI defines a controlled insurance program — a wrap-up — as an arrangement where one party procures insurance for all, or most, parties working on a project or site, typically including workers' compensation and general liability and sometimes professional or pollution liability. An owner controlled insurance program is arranged and controlled by the owner, customarily including general liability, workers' compensation and excess liability, aiming to eliminate gaps, avoid duplicate premiums, streamline claims and give the owner authority over coverage conditions and safety protocols. A CCIP is the same structure, sponsored by the general contractor.
If you are enrolled, ask what is excluded — off-site work, tools and equipment, auto liability and commercial property are common carve-outs that stay with you — how the bid credit is calculated, and how losses report into your own workers' compensation experience. NCCI's plan compares actual against expected losses, with primary losses weighted more heavily than excess losses, so frequency on a wrap-covered project can follow you.
Subcontractor default: insurance versus bonds
| Performance bond | Subcontractor default insurance | |
|---|---|---|
| Instrument | Surety guarantee, three-party | First-party insurance policy |
| Who qualifies the sub | The surety | The contractor, via its own prequalification program |
| Contractor retention | None in the usual structure | Contractor retains a percentage of losses |
| Typical fit | Available across contractor sizes | Larger contractors with significant subcontracted work |
IRMI describes default insurance as an alternative to performance bonds for financing contractor-default risk, requiring the insured to implement rigorous subcontractor prequalification and retain a percentage of losses through co-insurance — best suited to enterprises with substantial subcontracted work and established subcontractor relationships. It is commonly called Subguard, originally one insurer's brand name. The trade-off: underwriting judgment moves from a surety to you, with real retained loss.
Design responsibility on the project
Design-build and delegated design move professional liability onto the contractor. IRMI defines contractors professional liability insurance as a specialized policy covering a contractor's liability for design errors or omissions, often bundled with pollution liability and available annually or project-specific. Like other professional liability forms it is typically claims-made, so the retroactive date and extended reporting period govern whether a later defect allegation is covered.
Weather, water intrusion and documented mitigation
Water intrusion is a recurring source of post-completion defect claims: envelope failures, flashing details, roofing transitions, below-grade waterproofing. Weather during construction compounds it, because a partially enclosed structure has no envelope yet.
Documented mitigation — sequencing that limits open-envelope exposure, temporary weather protection, water-testing protocols with retained records, envelope consultants, moisture monitoring during dry-in — is information underwriters weigh when evaluating a project or renewal. It is not a discount you are entitled to, and no carrier commits to a rate outcome in exchange for a mitigation program. What it does reliably is give an underwriter something concrete to assess, and give you evidence if a claim is disputed.
Safety works the same way, except the obligations are fixed by regulation regardless of insurance. OSHA lists construction hazards including falls from rooftops, unguarded machinery, struck-by incidents, electrocutions, silica dust and asbestos, and 29 CFR 1926.501(b)(1) requires fall protection for employees on a surface with an unprotected side or edge six feet or more above a lower level. Roofing has its own comp dynamics, covered in our roofing workers' comp article.
What underwriters evaluate on a project submission
- Project type, occupancy, construction class, height and stories
- Total completed value and the schedule of values behind it
- Contract form and the actual indemnity and insurance requirements
- Percentage of work subcontracted, and how subs are prequalified
- Site security, water-intrusion and hot-work protocols
- Loss history, experience modification, and wrap-up enrollment
- Named windstorm, flood zone and seismic exposure at the site
A hypothetical illustration
The following is a hypothetical example for illustration only. It is not a quote, a rate indication, or an actual claim outcome.
Suppose a general contractor builds a four-story mixed-use structure. The owner's contract requires completed operations additional insured status for the GC and owner for a defined term after substantial completion. The GC collects certificates from every subcontractor and proceeds.
Three years later, water intrusion at a curtain-wall transition produces a defect claim, and the glazing subcontractor's endorsement turns out to be an ongoing-operations form — which, under this hypothetical, would not reach work completed years earlier, leaving the GC's own policy to absorb the defense. The certificate said "additional insured"; the endorsement decided the outcome.
Documentation a carrier will request
- Executed contract, or at minimum the insurance and indemnity articles
- Schedule of values and total completed value
- Construction schedule, including dry-in and enclosure dates
- Site plan, security and fire protection on site
- Subcontractor list with prequalification criteria, plus certificates and endorsements
- Written safety program and any site-specific safety plan
- Loss runs, the experience modification worksheet, and wrap-up enrollment
Common mistakes
- Insuring builders risk to contract value instead of completed value
- Accepting subcontractor certificates without the underlying endorsements
- Assuming CG 20 10 satisfies a completed operations requirement
- Letting one general aggregate serve every project when CG 25 03 was available
- Bidding a wrap-up job without pricing what the wrap excludes
- Signing indemnity language before checking the project state's anti-indemnity statute
- Dropping completed operations endorsements while the obligation still runs
- Treating delegated design as a construction risk, not a professional liability one
Questions to ask your agent
- Is builders risk limited to the estimated completed value, and who is named on it?
- Are soft costs and delay in completion included, and at what sublimits?
- How are flood, earthquake and named windstorm handled at this site?
- Does my CGL carry a designated construction project aggregate, and can it be added?
- Which additional insured forms are on my policy, by form number and edition date?
- How long will completed operations status be maintained, and how is that tracked?
- What does this wrap-up exclude, and who insures the design responsibility?
Frequently asked questions
Who should buy builders risk — the owner or the contractor? Either can, and the contract usually decides. What matters is that every party with an insurable interest is named and that the limit reflects the estimated completed value.
Does builders risk cover faulty workmanship? Generally not the cost of correcting defective design, workmanship or materials. Resulting damage from an ensuing covered peril may be a different question — read the form.
What is the difference between ongoing and completed operations additional insured coverage? Ongoing operations forms address liability while work is in progress; completed operations forms address injury or damage after the work is finished. They are separate endorsements, and requiring one does not get you the other.
How long does construction defect exposure last? Longer than most contractors plan for. Statutes of limitation and repose vary by state, which is why completed operations continuity and retroactive dates deserve attention at renewal.
General information, not legal advice or a policy recommendation; coverage, exclusions and limits vary by carrier and policy form. Workers' compensation requirements vary by state, employer size and industry — in Texas, the Department of Insurance notes that private employers can choose to carry workers' compensation coverage, but it is not required in most cases.
Get a project insurance review
Before signing the next owner contract, read its insurance and indemnity articles against your actual policy forms. BluePeak Digital builds project-specific programs for construction firms, general contractors, trade and specialty contractors and real estate businesses. For the company-level program, see our contractor insurance guide or browse our coverage lines.
Request a construction project quote or contact our team with your contract in hand.