How to Insure Builders Risk Policies for Building Additions
In California’s fast-paced construction market, adding onto an existing building, especially an apartment complex, requires more than just architectural blueprints and a capable contractor. You’ll need the right insurance policy to protect your investment. Specifically, a Builders Risk Policy tailored to building additions can provide the financial protection needed during the construction phase.
At e360 Insurance Services, we specialize in apartment building insurance, and we’re here to guide California property owners through the process in 2025.
What is Builder’s Risk Insurance?
Builder’s risk coverage is a form of property insurance that protects new buildings during the process of construction or existing buildings being remodeled. When you’re running a building contractor business, you want peace of mind that your investment is protected against fire, theft, vandalism, all types of weather events, and more.
Why You Need Builder’s Risk for Additions
If you intend to add more units or amenities to the current building, or expand the building by adding a wing, for example, your current policy may not cover the new wing until it is built. An independent builder's risk policy provides financial protection for damage or loss that happens during the building phase.
Builder’s Risk for Apartment Additions in California
Given the specific legal, climate, and zoning challenges in California, builder’s risk policies must be tailored carefully. Here's how it typically compares to general apartment building insurance:
| Coverage Feature | Builder's Risk Insurance | Standard Apartment Building Insurance |
| Applies to under-construction areas | Yes | No |
| Covers tools, equipment, materials | Yes | No |
| Coverage timeframe | Temporary (during construction) | Ongoing (post-completion) |
| Fire, theft, vandalism | Yes | Yes |
| Worksite liability | No (needs separate policy) | No (needs separate liability policy) |
Legal Compliance in California (2025)
California law requires property owners and contractors to carry specific minimum coverage during construction. If your builder doesn’t offer a wrap-around policy that includes your interest as the owner, you must secure a builder's risk policy on your own.
In addition:
- California Civil Code Section 2782 regulates indemnity clauses in construction contracts.
- All insurance policies must comply with Proposition 103, which mandates that insurance rates must be approved by the California Department of Insurance.
- Any additions to apartment insurance in California must reflect earthquake and wildfire risks, especially in designated hazard zones.
Key Insights for 2025
Here are top considerations for apartment owners planning building additions in 2025:
- Start Early: Engage your insurance provider before the first shovel hits the ground.
- Bundle When Possible: Consider bundling apartment building insurance and builder’s risk into a package to streamline claims and oversight.
- Account for Delays: Policies should reflect realistic timelines, with options to extend if construction runs over.
- Understand Exclusions: Builder’s risk generally excludes flood and earthquake, two major risks in California. Add endorsements where necessary.
Apartment Insurance California: Protecting Your Investment
Once construction is complete, it’s essential to transition your builder’s risk policy into a comprehensive apartment insurance California policy that reflects the full value of your expanded property. Your updated policy of apartment building insurance in California should include:
- Property coverage (including new structures)
- General liability
- Loss of rental income
- Equipment breakdown
- Umbrella coverage for high-value buildings
Conclusion
Whether you're adding three units or an entire new building wing, having the right apartment insurance in California begins with understanding how builder’s risk policies work. With increasing climate risks and rising construction costs, California apartment owners can’t afford to cut corners.
Contact experts at e360 Insurance Services today to explore customized apartment building insurance California packages that include coverage for your next building addition project.
Disclaimer: This blog is for informational purposes only and should not be considered legal or insurance advice. Always consult a licensed insurance professional for policy-specific recommendations.