What is testing coverage in builder's risk insurance?

Complete Guide to Testing Coverage in Builder’s Risk Insurance

Why This Question Matters for Colorado and Utah Residents

Colorado and Utah construction projects face unique risks, from sudden hailstorms on the Front Range to unexpected cold snaps or power surges during new system installs. If you’re building or renovating commercial property, understanding what is (and isn’t) protected when you test new equipment is crucial.

• Disaster Risk: Hail, snowfall, and wildfire-prone conditions in Northern Colorado and Utah can cause power outages or equipment failures just as you start up HVAC or electrical systems for the first time.
• Complex Construction: New commercial builds in Denver or Salt Lake City often feature advanced electrical, mechanical, or HVAC systems that require thorough and potentially risky testing.
• High Claim Stakes: Testing failures can result in tens of thousands in equipment or building damage—builder’s risk claims in CO/UT average $15,000-$50,000 for test-phase losses, far more than typical construction wear-and-tear.

What Most People Get Wrong

Many owners and contractors assume standard builder’s risk automatically covers any damage during system commissioning, but regular policies often exclude testing-related losses without an explicit testing endorsement. Others mistake normal wear or gradual breakdown for covered damage, but insurance generally only applies to sudden, accidental failures—not routine malfunctions or improper operation.

Some believe testing coverage is only needed for “high-risk” projects, yet even simple HVAC system tests in Loveland or Park City have triggered major claims due to a faulty part or unforeseen surge.

The Complete Picture

Testing coverage is an optional endorsement for builder’s risk policies that protects your construction investment when new equipment or systems—such as HVAC, boilers, or electrical switchgear—are put through initial testing. If a covered peril (like a power surge, burst pipe from failed pressure test, or system overload) causes damage during these start-ups, testing coverage steps in to pay for repairs or replacement.

Standard builder's risk in Colorado or Utah does not automatically include coverage for testing-related incidents. You’ll need to add it if your project includes significant mechanical or electrical installations. Typical annual premiums for testing coverage run $200–$2,000 in addition to builder’s risk, depending on the scale. Wear and tear, faulty workmanship, or gradual damage remain excluded.

Making the Right Decision for Colorado and Utah Residents

Question 1: Does my project truly need builder’s risk testing coverage?

Test-phase risks vary by project, but consider these points:

• Do your plans include major HVAC, electrical, or plumbing systems requiring professional commissioning?
• Is your project in a region with frequent hail, severe cold, or fluctuating power (e.g., Denver, Fort Collins, Salt Lake City)?

Question 2: What could a testing-related loss actually cost my business?

Even a single short circuit during initial testing can destroy new equipment worth $10,000 or require schedule delays costing $25,000+ in labor and rental equipment. Reviewing past local claims, test-phase mishaps are among the most financially damaging construction losses.

Question 3: Have I selected the right coverage and documented all system tests?

To ensure smooth claims handling and regulatory compliance, retain records of commissioning protocols, certified technician reports, and before/after system photos. Colorado and Utah regulatory standards often require documented commissioning—failure to keep records may jeopardize coverage.