Construction All Risk Insurance: How to Protect Your Construction Business With the Right Coverage

8 min
Nov 16, 2022

No matter how careful you are, accidents happen.

One of your workers gets injured on the job, or your team damages a wall hauling in a massive beam. 

No worries you’ve got general liability insurance for that.

But what about unforeseen accidents or other damages not covered by a general liability policy?

This is when you’ll want to consider all risk insurance. Construction companies can cover most, if not all, of their bases by supplementing their protection with a construction all risk insurance policy.

In this guide, we’ll discuss:

  • What construction all risk insurance is
  • What all risk insurance covers
  • How much it costs
  • Why construction companies should purchase it
  • And more

Introducing the Flexbase Card: The Cash Flow Solution for Your Construction Business

The Flexbase Card is the kind of card you’ve been dreaming of — one that’s designed specifically for those in the construction industry.

As a construction business owner, you are well-acquainted with the cash flow issues inherent in the profession:

  • You need to pay your subcontractor, but you’re waiting for the second payment from your client; or
  • The cost of supplies has increased dramatically since the writing of the contract, and now you’re in a pinch to cover the cost of supplies that you needed yesterday

What you need is a credit card that can help you get over the hump until you have client payments in hand. What you need is the Flexbase Card.

With the Flexbase card, you’ll get 0% interest for 60 days*, which gives you plenty of time to buy the supplies you need before receiving payment from your client. Then you’ll be able to pay off the balance without accruing any interest fees.

The Flexbase Card also offers 10 times the credit of most other cards, meaning you don’t have to put large purchases on hold.

One of the best features of the Flexbase card is the ability to track receipts. If your team is in the middle of the job and realizes they need more supplies no problem! Just send someone to the supplier to purchase more materials, and with the click of a button, the receipt is recorded and assigned to the appropriate budget category.

See how you can leverage your spending capabilities with the Flexbase Card and get pre-approved today.

What Is Construction All Risk Insurance?

Construction all risk insurance is a policy that offers protection in the event of unforeseen external construction accidents.

This is a type of non-standard policy that provides coverage for:

  • Losses
  • Property damages
  • Third-party injury or damage
  • And more

Construction all risk insurance can be purchased by project owners, investors, contractors, and subcontractors. 

All risk insurance is limited, meaning the coverage ends when the job is completed. 

What Is Included in a Construction All Risk Insurance Policy?

An all risk insurance policy covers what the name implies – all risks as outlined in the policy. 

Construction all risk insurance covers a variety of risks that can occur during the construction process. This could include claims for damages, injuries, and equipment failures caused by:

  • Weather (hurricanes, snowstorms, etc.)
  • Vandalism
  • Fire
  • Theft
  • Gas explosion
  • Natural disasters (floods, earthquakes, etc.)

Construction all risk policies also cover third-party accidents. 

For example, if a trespasser enters the building and damages part of the structure, all risk insurance would cover the damages. And if third parties or subcontractors are injured, all risk insurance covers those injuries as well. 

Construction all risk insurance adds additional protection by covering building materials, equipment, and the structure itself — things that aren’t covered by general liability insurance.

Considering everything that is covered with all risk insurance, you may be wondering if anything is excluded. 

Generally, accidents or injuries that occur at your place of work are not covered. And it’s important to remember that coverage ends when the project is complete. So, if something happens after the job is finished, all risk insurance will not cover those damages.

Each all risk policy is different. 

To be totally clear on what an all risk insurance policy covers and what it doesn’t cover, it’s important to look at the policy carefully before purchasing. 

5 Types of Losses Covered by Construction All Risk Insurance

Before purchasing a construction all risk insurance policy, construction business owners should evaluate their risk and determine what type of coverage is the most essential for their business. Though each policy is different, most construction all risk insurance policies provide coverage for the following losses or damages.

#1: Loss of Revenue or Business

When delays happen because of accidents, weather events, or natural disasters, construction businesses are at risk of losing income due to missed deadlines. In this case, construction all risk insurance offers policies that will cover the lost income.

#2: Loss of Inventory or Equipment

Loss of equipment or inventory can happen as a result of:

  • Theft
  • Damage from natural disasters
  • Worn out parts

If the equipment can’t be replaced quickly, the project could experience major setbacks. 

Many all risk insurance policies will cover materials, equipment, and tools that have been destroyed. 

Additionally, builders’ risk insurance policies usually cover the building that’s being renovated or constructed as well as materials that are stored off-site or that are damaged or lost en route to the construction site.

#3: Cost of Repairs or Replacement

Not all accidents result in a complete loss of equipment. Sometimes, accidents and other unexpected events may result in damaged equipment.

In this case, construction risk insurance can be used to pay for repairs or replacement of damaged tools and equipment.

#4: Damage to the Property

One of the most common reasons for needing construction all risk insurance is because of damage to the property from:

  • A falling object
  • Storm damage; or 
  • Vandalism 

If something happens, and you don't have coverage, the damage can be severe, leaving you with costly repairs or the replacement of structures.

Construction all risk insurance policies can help cover the extra expenses that may result from damage to the building as well as expenses associated with the delay in finishing the project.

#5: Cost of Construction-Related Injury or Illness

Construction risk insurance policies usually provide coverage for personal injury caused by events that occur during the policy period, including: 

  • Accidents
  • Injuries due to falls or while traveling; and
  • Illnesses

Workers’ compensation insurance may also cover costs from work-related injuries, so be sure to understand the coverage from this type of insurance to make sure you’re taking advantage of all the coverage available to you.

Whether you’re dealing with any of these situations or not, cash flow in the construction industry is a big deal. With erratic and unpredictable payments and regular expenses, keeping cash on hand can be a struggle.

The Flexbase Card can help by providing you with purchasing power when you need it.

How a Construction All Risk Insurance Policy Can Help Your Business

Construction all risk insurance can provide exceptional value and protection at a relatively small cost. The potential benefits far outweigh the investment.

Builder’s risk insurance offers protection from:

  • Potential losses in income
  • Damaged or destroyed equipment
  • Lawsuits
  • Property damage
  • And more

Having coverage from an all risk policy can also help guarantee that the work on the project can continue despite the losses incurred.

3 Benefits of Construction All Risk Insurance Coverage

Having coverage for risks and events that are out of your control is invaluable. 

Armed with this kind of coverage, you’ll not only …

  • Be protected from unforeseen events
  • Have peace of mind; and
  • Be protected when projects are delayed

but you may also receive more business because of your reputation

When subcontractors and potential clients see that you are willing to invest in construction all risk insurance, they may recruit you for potential jobs knowing that you’re reliable and value responsibility.

Protection from Unforeseen Circumstances

We’ve already discussed unexpected events that can curtail or halt construction projects. Weather events, accidents, and vandalism can leave a contractor with all sorts of costly repairs and expenses.

Other unforeseen circumstances, like …

  • Economic downturns
  • Financial losses
  • Lawsuits and other legal situations

… can be just as unexpected and damaging.

Contractors know that all kinds of things can go wrong, and in the end, they are responsible for seeing that the issues are dealt with, and the project is completed.

For example, let’s say you’re working on a project, and a storm causes a limb to fall through the roof. Even though it was a freak accident, as the contractor, it’s your responsibility to make repairs and finish the job.

This is the exact scenario when you’d want to take advantage of your all risk construction insurance coverage. With the right coverage, you can be sure the work will go on and can be completed without unnecessary financial windfalls.

Peace of Mind for Contractors and Subcontractors

Construction risk insurance can provide peace of mind for businesses during the often stressful and time-consuming process of completing a construction project. 

It also gives peace of mind, knowing that things that are out of their control won’t derail the project or eat into your profit.

Protection in Cases of Delayed Projects

Delays in a construction project happen when property, tools, or equipment are damaged or destroyed. Not only may the structure need to be repaired, but without working tools and equipment, the contractor is at a loss to get the work done on time.

Construction all risk insurance policies can provide a cushion of protection in the event that a project is delayed or does not meet expectations.

Frequently Asked Questions About Construction All Risk Insurance Coverage

What is the Cost of Construction All Risk Insurance?

The cost of all risk insurance will vary depending on:

  • The level of coverage; and
  • The deductible amount

Most policies will have a monthly premium and a deductible that must be met before the insurance will pay any claims.

Typically, all risk insurance policies cost somewhere between 1% to 5% of the total construction budget.

What is the Coverage Amount for a Construction All Risk Insurance Policy?

The coverage amount for a construction all risk insurance policy typically depends on the type of policy that you purchase and the type of construction project.

If the project is small with low risk, a policy with minimal coverage may be appropriate. 

However, if the project is a high-cost, high-risk endeavor, purchasing a policy with more coverage may be the way to go.  

Whatever the size of the project or the risks involved, each contractor needs to know that the coverage they choose will be sufficient to give adequate protection.

What Is the Process for Getting Construction All Risk Insurance?

Deciding on an all risk policy and purchasing it can be a complex process and will depend on the specifics of your business and the project. 

Though each job and business is different, the typical process of purchasing construction all risk insurance may look something like this:

  1. Research insurance companies and their coverage. Much of this research can be done online or by contacting individual companies to inquire about available policies.
  2. After reviewing available options, the construction business owner should make a proposal to the insurance company.
  3. The insurance company will review the proposal and decide whether to offer coverage.

When choosing an insurance company for builder’s risk insurance, evaluate the following factors:

  • Reputation and customer service
  • Financial outlook
  • Coverage available
  • Cost

Many insurance companies offer special policies like all risk policies for construction companies. 

Five of the top-rated companies to consider are:

  1. The Hartford
  2. Chubb
  3. Travelers
  4. Progressive
  5. Liberty Mutual

Increase Cash Flow for Your Construction Business With a Flexbase Card

Whether you’re dealing with delays from accidents and unforeseen events or are simply experiencing cash flow issues common in the construction industry, Flexbase can help.

We understand the construction business and have created a cash flow solution that will help you keep your business running when income is halted or stalled.

The Flexbase Card is built specifically for construction companies like yours. 

With features like …

  • 0% interest for 60 days*
  • Receipt-tracking capabilities
  • 10x credit limits
  • No annual fees or deposits

… using the Flexbase card means: 

  • Fewer pay-when-paid disputes
  • Fewer liens and loans
  • More profits
  • More cash on hand; and
  • More business

See how the Flexbase Card can solve your cash flow problems. Contact us today to get started.


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8 min
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