Builders Risk Insurance in Texas: Coverage for Fix-and-Flip and New Construction Projects
\n \n \nBuilders risk insurance protects structures during construction or renovation against fire, wind, theft, and vandalism. This specialized policy fills the critical gap between when standard property coverage ends and the finished project begins, covering building materials, labor costs, and the structure itself from groundbreaking through project completion or first occupancy.
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\nThis coverage is one piece of a complete Texas contractors insurance program that keeps your business protected on every jobsite.
\n\nWhat does builders risk insurance cover?
\nBuilders risk covers the structure under construction, building materials on site and in transit, and temporary structures like scaffolding. Standard policies cover fire, lightning, wind, hail, explosion, vandalism, theft, and certain water damage. Many Texas policies use "special form" (all-risk) coverage that protects against any cause of loss unless specifically excluded.
\nHow much does builders risk insurance cost in Texas?
\nExpect to pay 1% to 5% of the completed project value. A typical fix-and-flip with a $300,000 completed value costs $3,000 to $9,000 for a 6- to 12-month policy. Coastal projects pay more due to hurricane exposure. Frame construction costs more than masonry, and higher deductibles can reduce premiums by 10% to 25%.
\nDoes builders risk cover flood damage?
\nNo. Standard builders risk policies exclude flood damage. Projects in flood-prone areas need a separate flood policy through the National Flood Insurance Program or a private flood insurer. Given Texas flood history, this additional coverage is strongly recommended for any project in or near a designated flood zone.
\nWhat Does a Builders Risk Policy Actually Protect?
\n\nBuilders risk insurance covers the structure and everything that goes into building it from the first delivery of materials through project completion or occupancy.
\n\nCoverage applies from the moment construction begins or materials arrive on site. The policy insures the building at its completed value, recognizing that the property increases in value as work progresses. If a fire destroys a partially completed building, the policy pays to rebuild it to the same stage of completion rather than just the value of raw materials lost.
\n\nCovered Under Standard Builders Risk
\n- \n
- The structure itself, including foundation, framing, roofing, and all installed components \n
- Building materials stored on site and materials in transit to the job site \n
- Temporary structures such as scaffolding, construction trailers, and fencing \n
- Fire, lightning, explosion, and smoke damage \n
- Wind and hail damage (critical for Texas projects) \n
- Theft of building materials and installed fixtures \n
- Vandalism and malicious mischief \n
Typically Excluded From Builders Risk
\n- \n
- Flood damage (requires separate flood policy) \n
- Earthquake damage \n
- Faulty workmanship, design errors, or defective materials \n
- Normal wear and tear or gradual deterioration \n
- Employee theft (covered under a separate crime policy) \n
- Government action, war, or nuclear hazard \n
For Texas projects, wind and hail coverage deserves close attention. North Texas ranks among the most hail-prone regions in the country, and a single severe storm can destroy an exposed roof, shatter windows, and damage exterior finishes on an unfinished building. The Gulf Coast faces hurricane exposure from June through November.
\n\nHow Should Fix-and-Flip Investors Structure Coverage?
\n\nFix-and-flip investors face a unique insurance challenge because their properties are typically vacant, in poor condition, and about to undergo significant renovation.
\n\nWhen you purchase a property for renovation, the prior owner's insurance terminates at closing. A standard homeowner's policy placed on a renovation property will likely exclude coverage during construction. A vacant dwelling policy may cover the structure but typically excludes materials, work in progress, and has limited protection against theft and vandalism.
\n\nInsure at completed value, not purchase price. If you buy a property for $180,000 and plan $70,000 in renovations for a completed value of $250,000, insure at $250,000. A fire after $60,000 in renovations on a policy covering only $180,000 creates a $60,000 shortfall paid from your pocket.
\nBuilders risk for flip projects should cover the existing structure at purchase value, all renovation materials and supplies both on site and in transit, the completed value of improvements, theft of building materials and installed fixtures, vandalism, and premises liability for injuries during construction. Some carriers offer combined packages designed specifically for renovation projects.
\n\nFix-and-Flip Coverage Checklist
\n- \n
- Purchase builders risk at closing with the policy start date matching the closing date \n
- Set coverage limit at the expected completed project value \n
- Name your general contractor and any subcontractors as additional insureds \n
- Add your lender as a loss payee on the policy \n
- Confirm wind and hail coverage is included or obtain a separate TWIA policy \n
- Verify theft coverage includes materials both on site and in transit \n
What Policy Period Should You Choose?
\n\nBuilders risk policies are written for a specific construction period, typically 3, 6, or 12 months, and the policy period should include buffer time for delays.
\n\nConstruction projects in Texas rarely finish on the original schedule. Foundation issues, permitting backlogs in fast-growing cities like Austin and the DFW suburbs, supply chain delays, and contractor scheduling conflicts all push timelines. Build at least a two-month buffer into your initial policy period.
\n\n| Project Type | Typical Policy Period | Common Extension Options |
|---|---|---|
| Minor renovation (cosmetic flip) | 3 to 6 months | 1 to 3 month extensions |
| Major renovation (structural changes) | 6 to 12 months | 3 to 6 month extensions |
| New construction (single family) | 9 to 12 months | 3 to 6 month extensions |
| New construction (commercial) | 12 to 24 months | 6 to 12 month extensions |
Extensions must be requested before the original policy expires. The carrier charges additional premium, typically pro-rated. Allowing the policy to lapse before requesting an extension may require a new application and higher rate.
\n\nOnce the project is complete, the builders risk policy must be replaced with a permanent policy. A homeowner's policy works for occupied properties, a vacant dwelling policy covers the listing period, and a landlord policy protects rental properties. There should be zero gap between builders risk termination and permanent coverage.
\n\nHow Do Texas Weather Risks Affect Pricing?
\n\nLocation within Texas is one of the biggest factors driving builders risk premiums because weather exposure varies dramatically across the state.
\n\nA project in Galveston or Corpus Christi pays substantially more than an identical project in San Antonio or Austin due to hurricane and windstorm exposure. Coastal counties may require a separate windstorm policy through the Texas Windstorm Insurance Association if the primary carrier excludes wind coverage.
\n\n| Cost Factor | Impact on Premium |
|---|---|
| Project value | Base premium calculated as 1% to 5% of completed value |
| Construction type | Frame construction costs more than masonry due to fire risk |
| Location | Coastal counties, flood zones, and high-crime areas increase rates |
| Project type | Renovation typically costs more per dollar than new construction |
| Deductible | Higher deductibles ($5,000 to $25,000) reduce premium 10% to 25% |
| Security measures | Fencing, cameras, and alarms can reduce theft and vandalism rates |
| Wind/hail deductible | Separate wind/hail deductible (1% to 5% of value) common in Texas |
TWIA requirement for coastal counties. In the 14 coastal Texas counties and parts of Harris County, many standard insurers exclude wind and hail coverage. TWIA provides this coverage as a last-resort market, but requires a WPI-8 certificate confirming the structure meets Texas windstorm building codes before issuing a policy.
\nWhy Do Vacant Properties Create Insurance Gaps?
\n\nThe period between property acquisition and active construction is one of the biggest insurance gaps for Texas renovation investors.
\n\nVacant properties present elevated risks that insurers price accordingly. Theft of copper plumbing and wiring, vandalism, squatter damage, undetected water leaks, and arson are all significantly more likely in vacant buildings. Standard property policies typically reduce or eliminate coverage after 30 to 60 days of vacancy.
\n\nProtecting Vacant Properties Before Construction
\n- \n
- Have a clear construction timeline established before closing on the property \n
- Purchase builders risk coverage at closing with an immediate start date \n
- Begin preliminary work within 30 days, including demolition, securing the property, or utility setup \n
- Document all activity on the property to demonstrate ongoing construction progress \n
- Consider a vacant dwelling policy to bridge any gap between acquisition and builders risk activation \n
Builders risk policies are designed to cover properties during construction, which inherently involves periods of vacancy. However, most policies require that active construction work is occurring or imminent. Purchasing a property and letting it sit vacant for six months before starting work may give the carrier grounds to question whether the policy was valid during that pre-construction period.
\n\nWho Should Purchase the Builders Risk Policy?
\n\nEither the property owner or the general contractor can purchase builders risk coverage, and the answer depends on the project structure.
\n\nWho Buys Based on Project Type
\n- \n
- Fix-and-flip investors who own the property and hire contractors should purchase the policy and name the GC as additional insured \n
- Custom home builds where the homeowner hires a GC often use the contractor's master builders risk policy \n
- Commercial projects typically specify responsibility for builders risk coverage in the construction contract \n
- All parties with insurable interest, including owner, GC, subcontractors, and lender, should be named on the policy \n
Your general contractor's general liability and workers' compensation insurance protect the contractor, not your property. If a fire destroys the structure during renovation, the contractor's insurance does not pay to rebuild it. You need your own builders risk policy to protect your property investment.
\n\nThe Bottom Line
\n\nBuilders risk insurance is essential for any Texas construction or renovation project because standard property policies do not cover buildings under construction. The risks from fire, wind, hail, theft, and vandalism are elevated during this vulnerable period, and an uninsured loss can wipe out your entire investment. For fix-and-flip investors, insure at the completed project value rather than the purchase price, build buffer time into the policy period, and address the vacant property gap between acquisition and active construction. The premium is a small percentage of total project value and eliminates catastrophic financial exposure. Get a free builders risk quote to compare coverage options for your next Texas project.
\n\nFrequently Asked Questions
\n\nDoes builders risk insurance cover flood damage in Texas?
\nNo. Standard builders risk policies exclude flood damage. Projects in flood-prone areas, which include large portions of Houston, parts of Central Texas, and areas along rivers and creeks, need a separate flood policy through the National Flood Insurance Program or a private flood insurer that offers builders risk flood endorsements.
\nWho should buy the builders risk policy, the owner or the contractor?
\nFor fix-and-flip investors who own the property and hire contractors, the investor should purchase the policy and name the general contractor as an additional insured. For custom home builds, the GC often carries a master builders risk policy. The construction contract should specify which party is responsible.
\nWhat happens to coverage when the project is complete?
\nBuilders risk coverage terminates when construction is complete, the building is occupied, or the policy period expires, whichever comes first. You must transition to a permanent property insurance policy with zero gap. Many builders risk policies provide a 30- to 60-day automatic extension after completion to allow time for this transition.
\nCan I get one policy for multiple flip projects?
\nYes. Investors managing multiple simultaneous projects can obtain a blanket builders risk policy or a rolling program that covers multiple properties under one policy. These programs specify maximum per-project values and aggregate limits and are typically more cost-effective than individual policies for investors doing three or more flips per year.
\nDoes my contractor's insurance cover my renovation project?
\nNo. Your contractor's general liability and workers' compensation policies protect the contractor from claims, not your property. If a fire destroys the structure during renovation, the contractor's insurance does not pay to rebuild it. You need your own builders risk policy to protect your property investment.
\nIs builders risk insurance required in Texas?
\nTexas does not legally require builders risk insurance, but most construction lenders require it as a condition of financing. Even without a lender requirement, carrying builders risk is strongly recommended because a total loss during construction without coverage means losing your entire investment.
\nWhat is the difference between builders risk and general liability?
\nBuilders risk is property insurance that covers the structure and materials during construction. General liability covers bodily injury and property damage claims made by third parties. Both are needed on a construction project but they protect different things. Builders risk protects the building itself while general liability protects against lawsuits.
\nHow do I get a WPI-8 certificate for coastal Texas projects?
\nA WPI-8 certificate is issued by a licensed Texas windstorm inspector who verifies that the structure meets Texas Department of Insurance windstorm building code requirements. You must schedule the inspection during construction at specific stages. The certificate is required to obtain wind and hail coverage through TWIA in the 14 coastal counties and parts of Harris County.
\nCan I extend my builders risk policy if construction takes longer than expected?
\nYes. Most carriers offer extensions, but you must request the extension before the original policy expires. The carrier will charge additional premium, typically pro-rated based on the original cost. Allowing the policy to lapse before requesting an extension may require a new application and higher rate.
\nDoes builders risk cover soft costs like architect fees and permit costs?
\nStandard builders risk policies do not cover soft costs. However, many carriers offer a soft costs endorsement that covers additional expenses incurred due to a covered delay, including extended architect and engineering fees, additional permit costs, loan interest during the delay period, and additional property taxes. This endorsement is worth adding for larger projects.
\nResources
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- Texas Department of Insurance — Commercial Lines \n
- Texas Department of Insurance — Home Insurance Consumer Guide \n
- Insurance Information Institute — Homeowners Insurance Facts and Statistics \n
- OSHA — Construction Industry Safety Standards \n
- Insureon — General Liability Insurance Guide \n
- Insurance Institute for Business and Home Safety — Roofing Guidance \n
EJ Nadolny is the founder and principal agent of Canopy Insurance Texas, an independent insurance agency based in San Antonio. With deep expertise in home, auto, commercial, and specialty insurance lines, EJ leads a team that represents 18+ carriers across Texas. His approach focuses on finding the right coverage at the right price by shopping the market on behalf of every client — not pushing a single carrier’s products.
