Builders Risk Insurance for Ground-Up Construction vs. Tenant Improvements 

Whether you are breaking ground on a new commercial building or renovating a leased space, builders risk insurance financially protects your investment during the construction phase. The coverage is designed for projects in progress, and the type of project you are undertaking shapes how that coverage should be structured.

Ground-Up Construction: Building From Scratch

Ground-up projects involve constructing an entirely new structure on a vacant or cleared lot. Builders risk policies for these projects typically cover:

• The structure itself—May help cover the building as it takes shape
• Materials—May help cover materials stored on-site or in transit
• Temporary structures—May help cover items such as scaffolding and fencing
• Soft costs—May help cover expenses such as architect fees and permit costs if construction is delayed due to a covered loss

The policy period generally aligns with the project timeline and expires once the building reaches substantial completion.

Tenant Improvements: A Different Set of Risks

Tenant improvement projects, often called TI work, involve renovating or finishing a space inside an existing building. The existing structure is already insured under the building owner’s property policy. Builders risk coverage for TI work focuses on the new construction within that space, including materials, fixtures and finishes being installed.

Coordination between the tenant’s policy, the contractor’s policy and the building owner’s coverage is important here. Gaps can leave materials or completed work uninsured if the parties assume someone else is handling coverage.

Choosing the Right Policy Structure

Both project types benefit from a policy that fits the scope of work, the project timeline and the parties involved.

Contact Smaistrla Insurance Agency to review your next construction project and confirm your builders risk coverage fits the work you are doing.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.