What is defined as "builder's risk" insurance?

Builder's risk insurance is specifically designed to protect a construction project while it is underway. This type of coverage typically addresses risks such as damage or loss due to fire, theft, vandalism, or specific weather events that may occur on the building site. Since the construction process involves various risks, obtaining this insurance is essential to safeguard the investment in materials, labor, and the structure itself prior to its completion.

Coverage under builder's risk insurance generally applies to the property as long as it is in the process of being built or renovated, which is why it is critical for builders and contractors to secure this type of insurance for their projects. This insurance can encompass not only the building itself but also materials and equipment that are at the site or intended to be used for construction.

In contrast, other options do not accurately reflect what builder's risk insurance encompasses, as they refer to unrelated types of insurance or coverage.