General Liability vs Builder’s Risk: What California Contractors Need

General liability covers injury and property damage you cause to other people and their property. Builder’s risk, also called course of construction, covers the building under construction itself against fire, theft, vandalism, and weather until the job is complete. They cover different things, and most California projects of any size need both.

What General Liability Covers

• A third party injured on or by your work
• Damage you cause to a client’s existing property or a neighboring structure
• Claims that surface after completion, through completed operations coverage

What Builder’s Risk Covers

• The structure under construction, including materials on site
• Fire, theft, vandalism, and most weather events during the build
• Materials in transit and stored off site, when the policy is endorsed for it

Side by Side

• General liability protects others from you. Builder’s risk protects the project itself.
• General liability runs annually. Builder’s risk runs for the project term.
• General liability is required by nearly every California contract. Builder’s risk is usually required by the owner or lender.
• General liability is typically bought by the contractor. Builder’s risk may be bought by the owner or the contractor depending on the contract.

The Remodel Gap Californians Miss

On a renovation, a standard builder’s risk policy covers the new work but may exclude the existing structure you are working on, and the homeowner’s policy often restricts coverage during major construction. A renovation builder’s risk policy can be endorsed to include the existing building. On high-value California remodels that endorsement is frequently the difference between a covered and an uncovered total loss.

Which Do You Need?

If you are a contractor working on other people’s property, general liability is not optional, because the contract will require it. Add builder’s risk when you are responsible for the structure during construction, which is typical on ground-up work and on major remodels where you control the site. Coverage depends on policy wording and the contract.

Sources

• Contractors State License Board — cslb.ca.gov
• California Department of Insurance — insurance.ca.gov
• Insurance Information Institute — iii.org