Builder’s Risk vs. Contractor’s Equipment Coverage: Know the Difference or Pay Later
Author Peter Katkov | Founder | Peter Katkov is the Founder and CEO of Apex Risk & Insurance Services, a boutique commercial insurance brokerage headquartered in Carlsbad, CA. Peter founded Apex to bring high-touch, client-focused risk mitigation back to San Diego business owners. Apex specializes in hard to place coverage for industries ranging from construction and hospitality to wave pools and life sciences.
In short: Builder’s Risk insurance protects the structure being built, while Contractor’s Equipment Coverage protects the tools and machinery used to build it. Both policies cover property on a jobsite, but each one is built around a different layer of exposure. Carrying both gives contractors a complete picture of coverage across the life of a project.
What Is Builder’s Risk Insurance?
Builder’s Risk, also called Course of Construction insurance, is temporary coverage that protects a structure while it’s being built or renovated. It’s built around the project itself rather than the equipment used to complete it.
What Builder’s Risk Covers
Builder’s Risk protects the building under construction along with the materials, fixtures, and equipment once they’re installed into the structure. It responds to fire, lightning, wind, hail, and explosion, along with vandalism or theft of building materials still on site. Certain types of water damage and collapse are typically included as well.
What Builder’s Risk Does Not Cover
This policy is not built to cover tools or heavy machinery, equipment stored offsite or in transit, employee theft, mechanical breakdown, or normal wear and tear. A useful way to sort what falls under this policy: materials and fixtures installed into the structure typically fall under Builder’s Risk. Coverage runs for the duration of the project and ends once it’s complete or occupied, so timing the policy correctly matters.
What Is Contractor’s Equipment Coverage?
Contractor’s Equipment Coverage is property insurance for the equipment crews rely on to get the job done. It protects mobile equipment, tools, and machinery that a company owns, rents, or leases.
What Contractor’s Equipment Covers
This policy protects heavy machinery such as bulldozers, backhoes, and cranes, along with power tools, hand tools, generators, and compressors. Coverage follows the equipment wherever it goes, whether that’s in storage, in transit, or on a jobsite, and it responds to losses from theft, fire, vandalism, or accidental damage.
What Contractor’s Equipment Does Not Cover
Buildings and structures fall outside this policy, along with materials once they’re installed, damage from wear and tear or operator error, and any items not listed on the equipment schedule. Rented or leased equipment can often be added by endorsement, though not every policy includes this by default, which makes it worth confirming with a broker directly.
How Do the Two Policies Compare?
| Feature | Builder’s Risk | Contractor’s Equipment |
| What it protects | Structures under construction | Mobile equipment and tools |
| Coverage area | Jobsite only | Jobsite, transit, and storage |
| Common claim examples | Fire, wind, theft of building materials | Theft of tools, accidental damage |
| Coverage timeline | Project duration only | Year-round |
| Items covered | Installed materials, fixtures | Owned, rented, or leased equipment |
Why Carrying Both Policies Matters
Each policy covers a distinct layer of jobsite risk, and together they close the full picture. A stolen skid steer falls under Contractor’s Equipment Coverage. Fire damage to framing materials and installed HVAC systems falls under Builder’s Risk. Knowing which policy applies before a loss happens keeps a claim moving instead of stalling out on a coverage question.
Who Is Responsible for Each Policy?
Builder’s Risk is typically purchased by the property owner, developer, or general contractor, and it’s often required as part of the construction contract. Contractor’s Equipment Coverage is usually carried by subcontractors and general contractors who own or rent the equipment being used on site. Contractors managing multiple sites or bidding across state lines should confirm who holds each policy and what it includes before work begins.
How Can Contractors Confirm They Are Fully Covered?
A quick inventory answers most of the question. Start by reviewing what tools and equipment the business owns, where they’re stored and used, whether the crew is relying on rental or leased gear, and who is responsible for insuring the jobsite itself. From there, a broker should be able to walk through what’s covered and what isn’t in plain language, which is the clearest sign a program is built correctly.
Frequently Asked Questions
Does Builder’s Risk cover stolen tools?
No. Stolen tools and equipment fall under Contractor’s Equipment Coverage. Builder’s Risk covers the structure and installed materials, not the tools used to build it.
Does Contractor’s Equipment Coverage protect a building under construction?
No. That coverage is built for mobile equipment, tools, and machinery. The structure itself is covered under a Builder’s Risk policy.
Who is required to carry Builder’s Risk insurance?
Requirements vary by contract, though Builder’s Risk is commonly purchased by the property owner, developer, or general contractor and is often specified in the construction agreement.
Can rented equipment be covered under a Contractor’s Equipment policy?
Often, yes, through an endorsement added to the policy. Coverage for rented or leased equipment isn’t automatic on every policy, so it’s worth confirming directly with a broker.
When does Builder’s Risk coverage end?
Builder’s Risk coverage typically ends when the project is complete or the building becomes occupied. Timing this correctly matters, since a gap between project completion and a permanent property policy can leave the structure temporarily uninsured.
Contractors who understand where one policy ends and the other begins are in a stronger position heading into every new project. Apex Risk works with contractors and builders across California to build property and equipment programs that hold up when a claim actually happens. For related coverage questions, see how General Liability compares to Professional Liability or review our guide to navigating an insurance audit. Contact Apex Risk to review your Builder’s Risk and Equipment Coverage before your next project breaks ground.
By Peter Katkov | Apex Risk & Insurance Services
5901 Priestly Drive Ste 140, Carlsbad, CA 92008
760-376-9091 | peter@apex-risk.com
