Is theft by employees covered under builder's risk insurance?

Complete Guide to Employee Theft and Builder's Risk Insurance

Why This Question Matters for Colorado and Utah Residents

Employee dishonesty is one of the most costly but commonly misunderstood risks on construction projects. Colorado and Utah construction businesses face distinct challenges:

• Regional Crime Trends: Property theft rates in Northern Colorado and urban Utah hubs are above national averages, often targeting worksites with high-value materials.
• High-Stakes Construction Risks: With average builder's risk premiums starting at $800/year (and losses from a single theft claim commonly $10,000+), knowing exactly what is covered protects your project budget and reputation.
• Policy Exclusions Are Crucial: Regional studies show 42% of construction businesses lack employee dishonesty or crime coverage, mistakenly believing their builder's risk policy is sufficient. This often leads to costly surprises.

What Most People Get Wrong

Common misconception: Many business owners believe builder's risk policies automatically cover all theft—including theft by their own employees, subs, or trusted vendors. In reality, most builder's risk policies specifically exclude losses caused by employees (or anyone entrusted with site access).

Second misconception: Some think general liability or property coverage fills this gap. In fact, you typically need a separate fidelity bond (or crime policy) to address losses from employee dishonesty.

The Complete Picture

Builder's risk insurance is designed to protect construction materials, equipment, and partially finished work against risks like weather, fires, vandalism, and—sometimes—theft. However, almost all policies exclude theft by anyone who has authorized access to the site (employees, managers, contractors with keys, etc.). This exclusion is standard across carriers in Colorado and Utah and is highlighted in policy documentation to meet state transparency regulations (NAIC-accredited for consumer protection).

If you're concerned about employee theft—tools, materials, cash, or project assets—your solution is a separate fidelity bond or employee dishonesty policy. These specialized policies are widely available through local carriers, with pricing starting around $300–$1,000/year depending on project size and risk factors. For full protection, discuss the overlap and gaps with your independent agent: over two-thirds of businesses in CO-UT rely on local brokers to build the right coverage combo for complex risks like theft.

Reassess your exposure at key stages of your project, especially as values fluctuate due to material deliveries or expanded work scopes. Transparent policy review and regular updates help close coverage gaps before a loss occurs.

Making the Right Decision for Colorado and Utah Residents

Question 1: Have you clearly identified who has access to your worksite—and what your policy actually covers?

It's essential to carefully review your builder's risk policy for theft exclusions. Consider these points:

• Are employees, subcontractors, or suppliers specifically excluded?
• Does your policy explicitly state "employee theft" is not covered?

Question 2: Are you protected if an employee, manager, or trusted vendor steals from your project?

Builder's risk insurance will not pay for employee theft or dishonesty—period. For coverage:

• Ask your local independent agent about crime policies or fidelity bonds.
• Consider the size and value of your project (e.g., projects over $100,000 or involving valuable equipment are at greater risk).

Question 3: When was your last coverage review—and have site conditions or personnel changed?

Major claim drivers in the Rockies include weather, crime, and project changes. Schedule a policy review after significant deliveries, contractor changes, or if you expand project scope. In Colorado/Utah, regulations require clear communication of exclusions—use this transparency to your advantage and keep your coverage in sync with your site's evolving risks.