Builder's Risk Insurance in Texas: What Contractors and Owners Need During Construction

Course-of-construction coverage protects the structure, materials, and your construction loan while the build is exposed — here's how to set it up right in Texas.

A building under construction is one of the most exposed assets in insurance. It's open to the weather, full of expensive materials, often unsecured overnight, and not yet covered by a standard property or homeowners policy. Builder's risk insurance — sometimes called course-of-construction coverage — is the policy that fills that gap, and in Texas it's a must-have for almost any ground-up build or major renovation.

What builder's risk covers

A builder's risk policy protects the structure while it's being built, along with the materials and supplies that will become part of it. That includes damage from fire, lightning, wind and hail, vandalism, and theft of materials from the site — the exposures most likely to hit a job before it's finished and occupied. Many policies can be extended to cover materials in transit or stored off-site, debris removal, and "soft costs" like extra loan interest or permit fees if a covered loss delays completion.

Who needs it — and who buys it

Either the property owner or the general contractor can carry builder's risk; what matters is that someone does, and that the limit matches the completed value of the project. For a custom home, that's the owner protecting their investment. For a spec build or a commercial project, it's usually the contractor, often as a condition of the construction loan — lenders almost always require proof of builder's risk before they'll release funds. Subcontractors generally aren't the ones buying it, but they should confirm the project is covered before they start work.

Texas-specific things to get right

Texas weather makes a couple of details critical. Wind and hail are the exposures most likely to damage a half-built structure, so confirm they're included and understand the deductible — a percentage wind/hail deductible on a large project can be substantial. If the site is in a flood-prone area, flood is excluded and needs to be addressed separately. And set the policy term realistically: builder's risk is written for the construction period, and projects run long, so build in enough time and know how extensions work before you're up against the expiration date.

Don't forget liability

Builder's risk covers the structure — it does not cover injuries or third-party damage. A complete construction insurance program pairs builder's risk with general liability, and adds commercial auto and, where appropriate, workers' compensation for crews. As an independent agency, TAP Insurance Agency can assemble the whole package and make sure the pieces actually fit together instead of leaving a gap between policies. When you're ready to put numbers to it, our builder's risk insurance page is the place to start, and our commercial insurance pages cover the broader coverages contractors need.

Whether you're an owner building a custom home or a contractor running multiple jobs, get the structure covered before the first load of lumber arrives. Call (800) 666-2254 or text (817) 646-6700 to put your project in front of multiple carriers.

Educational only; coverages vary by carrier and project. TAP Insurance Agency, PLLC — Rhome, TX, licensed in Texas and Oklahoma.