Builders Risk & Construction Insurance in Maryland: A Complete

What builders risk insurance covers in Maryland

Builders risk insurance is a specialized form of property coverage that protects a structure while it is under construction. Whether you are building a custom home in Ellicott City, adding a commercial addition in Columbia, or renovating a rowhouse in Baltimore, a standard property policy will not cover a building that does not yet exist. Builders risk fills that gap, and understanding how it works can save a project from financial disaster before the first tenant ever walks through the door.

A builders risk policy covers the structure itself, materials stored on site, and materials in transit to the job site. Covered causes of loss typically include fire, lightning, wind, hail, vandalism, and theft of building materials. Maryland sees everything from nor'easters and ice storms to summer thunderstorms and occasional tornadoes, so having weather-related coverage locked in before framing begins is a requirement for most lenders and project owners.

A standard builders risk policy typically includes:

• The structure in progress : coverage applies from the moment construction starts, protecting the building at each stage of completion.
• Building materials and supplies on site : lumber, HVAC units, fixtures, and other materials stored at the project location are covered against theft and physical damage.
• Materials in transit : many policies extend coverage to materials while they are being delivered, up to a specified distance from the job site.
• Temporary structures : scaffolding, fencing, and construction trailers can often be included by endorsement.
• Soft costs : some policies cover indirect financial losses from a delay, such as additional loan interest, permit re-fees, and architect fees caused by a covered loss.

What builders risk does not cover is equally important to understand. Most policies exclude faulty workmanship, design errors, employee theft, normal wear, and earthquake. Flood is also excluded, which matters in Maryland where low-lying areas along the Patuxent, Patapsco, and Chesapeake watershed can flood during heavy rain events. A separate commercial flood policy is worth discussing for any ground-level or basement-adjacent project.

Who needs a builders risk policy in Maryland

Anyone with a financial stake in a project under construction needs builders risk coverage. That said, who actually purchases the policy can vary by contract, and this is one of the most common points of confusion on Maryland construction projects.

Property owners and developers

If you own the land and are hiring a general contractor to build, you almost certainly need builders risk in your name. Lenders financing construction loans in Maryland routinely require it as a condition of the loan. The policy protects your investment in the structure from groundbreaking through substantial completion.

General contractors and construction firms

Some contracts place the responsibility for builders risk on the general contractor. In that arrangement, the GC purchases the policy and lists the property owner and any subcontractors as additional insureds. This is common on commercial projects and design-build contracts.

Remodeling and renovation contractors

Renovation work on an existing building is a different situation. A homeowner's existing policy may provide some coverage during minor renovations, but once the project crosses a certain cost threshold or involves structural changes, most carriers will exclude the renovation work or void the entire policy if not notified. A separate builders risk policy for the renovation scope protects everyone involved.

Subcontractors

Subcontractors generally do not purchase the builders risk policy themselves, but they should always confirm they are listed as an additional insured on the GC's policy. Their own general liability coverage handles third-party bodily injury and property damage claims, but it does not protect the structure itself.

How builders risk insurance is priced in Maryland

Builders risk premiums are calculated primarily as a percentage of the completed project value, typically ranging from 0.5% to 1.5% of that value for a one-year policy term. A $500,000 home addition might carry an annual premium of $2,500 to $7,500, depending on the factors below. Maryland-specific variables can push rates toward the higher or lower end.

Pricing factors

• Project type and scope : new ground-up construction is generally priced differently than renovation or tenant improvement work, because renovation projects carry added risk from existing structural unknowns.
• Construction materials : a steel-frame commercial building is rated differently than a wood-frame residential project. Wood-frame construction carries higher fire risk, and that is reflected in the premium.
• Location and local risk exposure : projects near the Chesapeake Bay or flood-prone rivers in Howard County and Anne Arundel County may face higher premiums or require additional endorsements.
• Project duration : policies can be written for 6, 12, or 18 months. Longer timelines cost more. If the project runs over schedule, extend coverage before it lapses, not after.
• Security and site controls : fenced sites with alarm systems and on-site storage lockboxes reduce theft exposure and can lower premiums.
• Deductible chosen : higher deductibles reduce the premium but increase out-of-pocket cost at claim time. For a small renovation, a $5,000 deductible may make sense. For a $3 million commercial build, carriers may require a higher minimum deductible anyway.

Because no two projects are identical, the best way to get an accurate number is to work with an independent agent who can shop the policy across multiple carriers. Builders risk is written by a narrower set of carriers than standard property insurance, so comparing options matters.

Maryland construction considerations that affect your coverage

Maryland's regulatory environment and geography create specific coverage considerations that out-of-state contractors sometimes miss and that local builders occasionally overlook.

Maryland building permits and code requirements

Maryland counties issue their own building permits and conduct inspections at various stages of construction. Howard County, Baltimore County, and Anne Arundel County each have distinct processes. If a loss occurs and the structure was not built to code at the time of the loss, some carriers will limit payment or apply code-upgrade exclusions. An ordinance or law endorsement on your builders risk policy can cover the cost of bringing undamaged portions of the structure up to current code after a covered loss. This is a coverage gap that catches many owners off guard, particularly on older renovation projects.

Flood risk along Maryland waterways

Standard builders risk excludes flood. Maryland's topography puts many construction sites within reach of flood-prone areas. The Ellicott City flash flood events of 2016 and 2018 are a clear reminder that rainfall-driven flooding can happen fast and cause catastrophic losses. If your project site sits in or near a FEMA Special Flood Hazard Area, discuss a separate flood policy with your agent before the slab is poured.

Workers compensation is separate

Builders risk covers the property, not the people. Maryland law requires most employers to carry workers compensation insurance, and construction employers fall firmly in that category. A builders risk claim will not pay for an injured worker's medical bills or lost wages. Make sure workers comp is in place from day one of construction.

When does the policy end?

This is a question that trips up many project owners. Builders risk coverage typically ends at the earliest of: the policy expiration date, the date the project is substantially complete, or the date the owner takes occupancy. Once the building is occupied or the certificate of occupancy is issued, a permanent commercial property policy or homeowners policy needs to replace the builders risk policy. There should be no gap between the two.

Builders risk vs. other commercial policies

Builders risk is one piece of a broader commercial insurance picture for contractors and developers. Knowing where it fits alongside other policies prevents gaps and unnecessary duplication.

Builders risk vs. commercial property

A commercial property policy covers an existing, completed building designed for structures already in use. Builders risk covers the structure during construction. You need the right policy for the right phase of the project.

Builders risk vs. general liability

General liability covers third-party bodily injury and property damage claims. If a passerby is injured by falling debris from your job site, general liability responds. It does not cover damage to the structure under construction. Both policies are typically needed simultaneously on an active job site.

Builders risk vs. inland marine

Inland marine insurance covers equipment and tools in transit or at various job sites. If a contractor's tools and equipment are stolen from a job site, inland marine (sometimes called a contractor's equipment floater) responds. Builders risk covers the structure and on-site building materials, not the contractor's owned equipment. Many contractors carry both.

Business owners policies and builders risk

A Business Owners Policy (BOP) bundles general liability and commercial property for small businesses, but it is not designed to cover active construction projects. A BOP on a contractor's own office covers that office, not the job sites where the work happens.

Common builders risk claims in Maryland and how to avoid them

Understanding the most common claim types helps owners and contractors take steps that protect both the project and the policy's loss history.

• Theft of materials : copper wire, HVAC units, and lumber are frequent targets at unsecured Maryland job sites. Proper fencing, lighting, and lockboxes reduce exposure significantly.
• Wind and hail damage : Maryland averages about 30 days of thunderstorm activity per year. Roofing materials, windows, and partially framed walls are vulnerable until the building envelope is closed. Tarping materials and following proper tie-down procedures before storms are basic but effective precautions.
• Water intrusion : rain entering an unfinished structure can damage framing, subfloors, and stored materials. Proper temporary weatherproofing is the contractor's responsibility and can prevent a policy dispute over whether damage resulted from a covered storm event or neglect.
• Fire during construction : temporary heating equipment, welding operations, and improperly stored flammables all raise fire risk on active sites. Maryland OSHA regulations govern many of these activities, and following them reduces both risk and potential coverage complications.
• Collapse : partial structural failures can occur during framing or when shoring is removed. Involving licensed engineers and inspectors in the structural phases reduces this risk and keeps the project in compliance with permit requirements.

Get the right builders risk coverage for your Maryland project

Builders risk insurance is not a commodity purchase. The right policy depends on the project type, location, timeline, contract structure, and who holds the financial risk. Getting those details wrong can mean a denied claim at the worst possible moment.

J.E. Schenk & Associates is an independent insurance agency serving Howard County, Baltimore County, Anne Arundel County, and surrounding Maryland communities. As an independent agency, we work with multiple carriers to find builders risk coverage that fits your specific project rather than a one-size-fits-all product. Whether you are a property developer breaking ground on a commercial project in Columbia, a general contractor managing residential builds in Sykesville, or a homeowner adding a major addition in Ellicott City, we can help you get the right policy in place before construction starts.

Call us at (410) 465-7474 or reach out through our contact page to talk through your project and get a builders risk quote. We will also review whether your project needs supporting coverage like general liability, workers compensation, or a commercial umbrella to make sure nothing falls through the cracks.