How long does builder's risk insurance last?
Builder's risk insurance usually covers the entire construction period, starting at groundbreaking and ending at project completion or occupancy. Extensions are available if your project timeline changes.
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Complete Guide to Builder's Risk Insurance Duration
Why This Question Matters for Colorado and Utah Residents
Understanding how long builder's risk insurance lasts is essential for anyone involved in new construction or major renovations in Colorado and Utah. Construction timelines are often impacted by regional weather extremes—like severe hail (Colorado ranks #2 in the nation for hail claims), heavy snowfall, or wildfire delays. The right coverage duration means protection for your project from groundbreaking through to final inspection, helping you avoid devastating out-of-pocket costs if a setback occurs.
- Weather-driven delays are common: Both states face frequent construction delays, with national studies showing projects average 46-70 days behind schedule. Regional factors like June hail in Northern Colorado and early-winter storms in Utah can easily push timelines.
- Compliance and inspections matter: Your builder's risk policy must last at least until the certificate of occupancy or final inspection, which may be delayed by local permitting backlogs.
- Protecting soft costs: Construction delays mean more than just physical repairs—soft costs, such as financing, legal fees, or lost rental income, are often at risk if extensions aren’t arranged proactively.
What Most People Get Wrong
A common misconception is that builder's risk coverage auto-renews or can be extended after it lapses—when in reality, policies are written for a specific project timeline, often 6, 9, or 12 months. If your policy ends before construction wraps and losses occur, those damages may not be covered. Many also overlook that coverage frequently ends at occupancy, not just at 'completion.' In Colorado and Utah, final inspections or delays from permit approvals can push occupancy dates unexpectedly.
Another mistake is ignoring the impact of local severe weather—such as hailstorms in Loveland or blizzards in Park City—that can halt or slow projects, requiring policy extensions to stay fully protected.
The Complete Picture
Builder's risk insurance is designed to last only for the active construction phase, starting with clearing the lot and ending with official project completion or occupancy—whichever happens first. Most commonly, policies last as long as your estimated building timeline, typically from 6 to 12 months. If your build is delayed (for example, by a late-spring hailstorm in Fort Collins or unexpected permit review in Salt Lake City), you or your contractor must contact your agent before the policy expiration to request an extension or endorsement—this is when 'soft cost' protection is especially valuable.
Premiums vary based on construction type, location, and timeline—averaging $800–$3,000 per $1M of coverage. Colorado and Utah's local risks, like fires and hail, can increase these costs. Always review policy documents and local requirements with a specialist to ensure uninterrupted protection until your certificate of occupancy is issued. Keep in mind: insurers in Colorado are required to process valid commercial claims within 60 days, so acting proactively keeps your project on track even when delays arise.
Making the Right Decision for Colorado and Utah Residents
Question 1: How does my construction timeline line up with my policy period?
It's critical to match your builder's risk insurance to your actual build schedule, especially considering local delays:
- Review your projected completion date, add buffer time for CO/UT weather-related setbacks (hail, snow, inspection slowdowns).
- Coordinate with your builder and permitting office to understand how delays might affect your occupancy date and policy needs.
Question 2: What are the risks if my project gets delayed?
In Colorado and Utah, nearly half of all commercial property delays stem from weather or permit issues. If your coverage period ends before your building is complete or occupied, losses may be uncovered. Consult your agent early if you sense delays—arrange extensions or endorsements before your initial policy expires for seamless protection.
Question 3: Are there future costs to consider if the policy needs extending?
Extensions usually involve additional premium, sometimes at higher rates if a loss is more likely (e.g., late-season builds or active weather). Review soft cost coverage—like interest, permit reapplications, or lost rental income—which can add $10,000+ in costs if not properly protected. Planning ahead with a local expert minimizes surprises and keeps your project budget predictable.
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Real World Examples
Supply Chain Delays on Harmony Road, Fort Collins
Background: Mark, a contractor building a mid-sized medical office, originally budgeted for a 9-month schedule with completion in October. Builder's risk insurance covered the full construction period, but severe hail in June delayed roofing by six weeks.
Coverage: $2 million policy, including $50,000 in soft cost coverage.
Monthly Premium: $350/month ($4,200/year)
The Incident: Supply shortages and a local building permit backlog threatened to push open date into winter. Mark worked with FoCoIns 30 days before policy expiration to secure a 2-month extension.
Total Claim Cost: $37,000 (lost rental income for delayed occupancy, covered under soft costs)
Mark's Cost: $1,000 deductible – coverage extension protected the project budget from a major hit.
"Without the extension and guidance from FoCoIns, that 6-week delay would've cost me almost $40K out of pocket. I felt supported every step of the way."
Winter Weather Setbacks in Park City, Utah
Background: Emily, an independent builder, started a small commercial build in April, planning to finish by November. Unexpected early snow forced a construction halt in October, making it unlikely to wrap before her 9-month builder's risk policy ended.
Coverage: $1.5 million policy with code upgrade and ordinance coverage.
Monthly Premium: $295/month ($3,540/year)
The Incident: With nearly two months of interior work left, Emily contacted FoCoIns in mid-November. She secured a 3-month extension before her policy lapsed, avoiding an uninsured period.
Total Claim Cost: $18,000 (including code-mandated fire suppression upgrades caused by changing city code during delay)
Emily's Cost: $2,500 deductible – extension meant the code upgrades and additional costs were covered.
"If I had let the policy expire, the code upgrade requirement alone would have sunk my project. FoCoIns' local knowledge made the process easy and stress-free."
Occupancy Inspection Delays in Downtown Salt Lake City
Background: Chris managed a 20-unit condo renovation, targeting a summer completion. The builder's risk policy was set for 12 months, ending August 31st.
Coverage: $3 million policy including business interruption insurance for potential rental losses.
Monthly Premium: $500/month ($6,000/year)
The Incident: An extended city inspection backlog meant occupancy couldn't be granted until late September. Because Chris arranged a 1-month extension in advance, coverage remained active.
Total Claim Cost: $22,500 (loss of rental income and additional inspection-related construction costs)
Chris's Cost: $1,500 deductible – a modest out-of-pocket bill compared to uncovered losses if coverage had lapsed.
"Staying proactive and working with an advisor who understands Salt Lake City's permitting quirks saved me from a massive financial headache."
Avoid These Common Mistakes
Mistake #1: Failing to Align Policy Period with the True Project Timeline
What People Do: Rely on the builder's initial schedule without adjusting the policy for weather or permit delays common in Colorado and Utah.
Why It Seems Logical: Builders want to avoid paying for 'extra' months, and assume projects will finish as scheduled.
The Real Cost: When weather or city permit delays push completion past the policy end date, gaps in coverage can lead to denied claims for damage or theft—potentially costing tens of thousands. In Colorado, a delayed project hit with late hail damage faced $28,000 uninsured costs after the policy expired mid-delay.
Smart Alternative: Work with a local FoCoIns advisor to review construction risk and set realistic coverage timelines—adding buffer or extensions as your project progresses. This safeguards your investment even in unpredictable seasons.
Mistake #2: Letting the Policy Lapse Before Final Inspection or Occupancy
What People Do: Cancel coverage once 'substantial completion' is declared or when construction appears finished, even if the certificate of occupancy or final inspection is still pending.
Why It Seems Logical: Many believe the building is protected as soon as major work is done, and want to minimize insurance spend.
The Real Cost: If a fire, theft, or vandalism happens after construction wraps but before legal occupancy, there's no coverage if the policy's ended. In Utah, a business lost $15,000 in restoration costs after a theft during the gap between final work and inspection sign-off.
Smart Alternative: Time your builder's risk policy to end only after the last city inspection or when the certificate of occupancy is granted. Your FoCoIns advisor can help monitor deadlines and arrange needed extensions.
Mistake #3: Overlooking Soft Cost Coverage in Extensions
What People Do: Extend builder's risk insurance for the minimum required time but ignore adding or updating soft cost protection for additional loan interest, permit fees, or lost income.
Why It Seems Logical: There’s a focus on covering the building materials, not indirect project expenses.
The Real Cost: Construction delays can rack up $10,000+ in extra financing or legal expenses, especially in cities like Denver and Salt Lake City where permit reapplications or code upgrades may be triggered by new regulations.
Smart Alternative: Always review soft cost coverage with an expert when discussing policy extensions, ensuring your endorsement protects all at-risk project investments—not just physical materials.
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