Do I need builder's risk insurance for renovation projects?

Complete Guide to Builder's Risk Insurance for Renovations

Why This Question Matters for Colorado and Utah Residents

Renovating a business property—whether it's a retail shop in Fort Collins or a tech office in Salt Lake City—exposes you to new risks not always covered by your standard commercial property policy. Understanding when builder's risk insurance is necessary is the difference between smooth upgrades and costly setbacks.

• Extreme Regional Weather: Colorado is ranked #2 nationally for hail claims, and Utah sees routine wind and freeze-thaw cycles. Renovations often expose interiors, making properties even more vulnerable to sudden storms or snowmelt flooding.
• Coverage Gaps During Construction: Most commercial property policies exclude damage to structures under renovation. Without builder's risk, you could face tens of thousands in uncovered losses.
• Project Value and Local Requirements: Renovations often push insured values above prior coverage, especially given rapid regional construction cost increases—up to 30% in some areas. Completing work to code is mandatory: Colorado requires code compliance, and coverage for ordinance/law upgrades during rebuilds is often only available through builder’s risk policies.

What Most People Get Wrong

Many business owners assume their regular property insurance covers all renovation activity. In reality, most policies specifically exclude claims related to ongoing construction, leaving property owners exposed just when risks are highest.

Another common pitfall is underestimating subcontractor exposures or assuming that a general contractor’s builder’s risk policy extends automatically to the owner's interest or all types of work. Gaps in policy alignment can result in expensive coverage disputes—especially if something goes wrong mid-project.

The Complete Picture

Builder's risk insurance is designed for renovation, remodeling, or build-out projects. It covers materials, structures (old and new), and often equipment or fixtures while work is underway. Eligible projects include major interior remodels, additions, and even significant system upgrades (like HVAC, re-roofing, or electrical rewiring).

In Colorado and Utah, typical builder's risk policies cost from $45 to $80 per $10,000 of project value—often less than $1,000 for mid-size renovations. For a $200,000 renovation in Greeley, expect annual premiums of $900–$1,600. With severe hail and wildfire risks, claims are not rare: regional water, wind, and theft at job sites are among the top reported incidents.

Remember, standard policies exclude flood, but post-wildfire flooding is surging in both states. Always confirm specifics with your independent agent, and coordinate coverage between property owner and contractor for seamless protection.

Making the Right Decision for Colorado and Utah Residents

Question 1: What is the total financial risk if something goes wrong mid-renovation?

- Assess the current and future value of both existing and new structures during renovations.
- Review your standard property policy for exclusions related to ongoing construction.

• Can you afford to replace materials, fixtures, or structural work if damage or theft occurs during the project?
• Does project value exceed current policy limits by more than 20%?

Question 2: Are all responsible parties clearly covered?

- Identify whether the general contractor, owner, or a third party holds the builder’s risk policy.
- Confirm that coverage extends to all subcontractor activities and both permanent and temporary structures.

Question 3: Will this protection align with Colorado or Utah-specific compliance needs?

Make sure your builder’s risk policy accounts for code upgrades, local permit requirements, and regional threats—such as hail, wildfire, and post-event flooding. If your business is in a municipality that requires insurance proof for permits (Boulder, SLC, etc.), secure coverage before work begins to avoid costly delays or legal issues.