Why Builder’s Risk Insurance Matters for Public Entities

Public entities continue to invest heavily in capital improvement projects—from new public safety facilities and infrastructure upgrades to school modernizations and municipal buildings. While these projects are essential, they also introduce a unique set of property and financial risks during construction.

Builder’s risk insurance plays a critical role in protecting public entities from unforeseen losses that can otherwise derail project timelines and budgets. In this article, we discuss construction risk considerations specific to public sector and municipal projects and how your organization can work with risk management specialists to assess coverage needs.

How Builder’s Risk Insurance is Applied in Public Entity Construction

Builder’s risk insurance is commonly used in public entity construction projects as a risk transfer mechanism designed to protect buildings and structures while they are under construction or renovation. Coverage typically applies from the start of construction through project completion and can be structured to include materials that are:

• On-site
• In transit
• Temporarily stored off-site

For public entities, this coverage is especially important because construction projects often involve multiple stakeholders, public funds and heightened scrutiny.

In the absence of owner-procured builder’s risk insurance, construction losses may trigger disputes between contractors, insurers and public owners, often resulting in project delays. Builder’s risk coverage provides a defined first-party claims mechanism that facilitates:

• Timely repair or replacement of damaged work
• Reduced reliance on contractor balance sheets
• Preservation of project schedules and public service delivery

With builder’s risk insurance, public entities can focus on completing projects on time and on budget to better serve their communities and meet their missions.

For a detailed overview of builder’s risk insurance coverage, policy structures and placement strategies, explore our construction builder’s risk insurance services.

Key Benefits of Builder’s Risk Insurance for Public Entities

As public entities develop new construction projects, a comprehensive builder’s risk insurance policy can help to protect their assets against exposures like fire and theft, ensuring they are covered from start to finish. Learn more about the key benefits of builder’s risk insurance for public sector organizations.

1. Clear Allocation of Risk

Public projects often involve a variety of stakeholders, including owners, general contractors, subcontractors and design professionals. A well-structured builder’s risk policy clarifies which losses are insured and reduces disputes over responsibility following a loss.

2. Alignment with Contractual Requirements

Many construction contracts require builder’s risk insurance to be placed by the owner or a designated party. Procuring coverage directly allows public entities to maintain control over limits, terms and conditions rather than relying solely on contractor-placed insurance.

For example, construction projects often require term extensions. With an owner-procured policy, the public entity is in control of the policy and can help facilitate extension requests directly with the carrier, helping to minimize rate increases during the final stages. Control of the policy also means control over potential claims, which can be critical in determining the way a loss is adjusted and recovered.

3. Reduced Project Delays

A loss without builder’s risk insurance can lead to funding delays, contract disputes and prolonged project interruptions. Owner-procured builder’s risk coverage supports faster recovery by providing a clear funding mechanism for repairs, helping projects stay on track.

4. Coverage Tailored to Public Sector Exposures

Builder’s risk policies can be customized to address exposures common to public entities, including:

• Phased construction or renovation of occupied facilities
• Large project values and extended construction timelines
• Compliance with public procurement requirements
• Coverage for testing, commissioning and soft costs where appropriate

By securing a builder’s risk insurance policy personalized to your unique risk profile, your organization will be better equipped to mitigate losses and safeguard the continuity of your mission. 

How Alliant Can Help You Secure Personalized Builder’s Risk Insurance

Builder’s risk insurance is not simply a construction formality; rather, it is a strategic risk management tool that protects public assets during one of their most vulnerable phases. By proactively securing builder’s risk coverage, public entities can safeguard public funds, reduce uncertainty and support the successful delivery of critical infrastructure projects.

As the premier specialty insurance broker, Alliant bridges the expertise of industry-leading public entity and construction specialists to successfully navigate clients planning new builds through the insurance marketplace. We leverage decades of industry expertise and hands-on experience to deliver meaningful insurance solutions and strategies that maximize resilience while mitigating losses. Whether your organization is constructing a new public building or upgrading existing infrastructure, Alliant brings the right expertise and specialists to any project, ensuring you’re protected from start to finish.

To learn more about how builder’s risk insurance fits into a broader public entity construction risk management strategy, connect with a specialist from Alliant Public Entity today.