Does builder's risk insurance cover subcontractors' work?

Complete Guide to Builder's Risk Insurance and Subcontractor Work

Why This Question Matters for Colorado and Utah Residents

Builder's risk insurance is essential for anyone investing in construction—whether you're a property owner, developer, contractor, or lender—in Colorado or Utah's dynamic real estate markets. The inclusion of subcontractors' work is critical because even a single oversight can lead to denied claims, costly disputes, and project delays.

• Regulatory and Lender Requirements: In cities like Fort Collins and Salt Lake City, lenders won't release construction funds without a builder's risk policy that covers all work—including that done by subcontractors.
• Risk of Severe Weather and Accidents: Both Colorado and Utah face seasonal hail, heavy snow, and wildfire risks; subcontractors' work (like roofing or framing) is often most exposed.
• Complex Construction Teams: With labor shortages and booming development, most projects rely on multiple subcontractors whose work must be explicitly included for proper protection.

What Most People Get Wrong

The most common misconception is that once you buy builder's risk insurance, every worker on the project is automatically covered. In reality, coverage often hinges on explicit policy language. If subcontractors aren’t named or documented, their work—and any loss or damage tied to it—may not be covered.

Another misunderstanding is assuming a general contractor’s policy will always protect all parties. In Colorado and Utah, claim disputes are common when documentation for subcontractors is missing or incomplete.

The Complete Picture

Builder's risk insurance generally covers property and work in progress—including materials, fixtures, and sometimes temporary structures—while your project is under construction or major renovation. Most policies will pay for losses caused by covered perils (like fire, hail, theft, or vandalism) that affect the entire jobsite, including the labor and materials provided by subcontractors. However, there's a major caveat: the subcontractor(s) must be listed as insureds or included in the description of covered work.

In Colorado, where the average small commercial builder pays $800–$3,000 a year in premiums per $1M of coverage, insurers strictly enforce documentation requirements. Utah regulations also require prompt claims (insurers have 60 days to pay after submission in CO), and undisclosed or uninsured subcontractor work can result in partial—or total—claim denials.

Before work begins, ensure your policy and project contracts match. Work with your broker to list all major subcontractors, use detailed contracts, and keep thorough records (including photos and receipts) to document the entire scope and who completed each task. This diligence is your best protection in case of loss or dispute.

Making the Right Decision for Colorado and Utah Residents

Question 1: Are all subcontractors and their work explicitly included in the policy?

Review your builder's risk policy and all project contracts before construction begins. Missing a subcontractor—such as your electrician, roofer, or landscaper—can leave gaps:

• Ask your broker to confirm named insureds and a description of work in writing.
• Make sure your contracts require each subcontractor’s work to be included.

Question 2: How will you document subcontractor progress and potential claims?

Maintain meticulous documentation—photos, signed invoices, and material receipts—for all subcontractor work. If an incident occurs (hailstorm, fire, or theft), this evidence is crucial for a successful claim and is required by local insurers and lenders.

Question 3: Are you prepared for project-specific risks in Colorado and Utah?

Identify location-specific risks (hail in Fort Collins, wildfire threat near Boulder, or snow loads in Park City). Discuss whether your builder’s risk policy includes necessary endorsements (like windstorm or ordinance/law) and if additional coverage (such as flood) is needed for your subcontractors’ scope.