Building a new home — Builders Risk during construction, HO-3 at Certificate of Occupancy
By Severance Calculator Editorial · Updated
The problem
A homeowner having a new house built (custom, semi-custom, or owner-builder) faces a coverage gap that catches many people: the standard HO-3 is not available until the structure is occupiable. From slab to Certificate of Occupancy, the correct policy is Builders Risk (sometimes called Course of Construction insurance). It covers materials on site, work in progress, theft of appliances and copper, weather damage to exposed framing, and (with the right endorsements) tools and equipment. Forgetting Builders Risk is one of the most expensive omissions in a self-managed build.
The data
A 2,500 sqft custom build at NAHB Pacific custom median $200/sqft = $500,000 hard cost over a typical 10-14 month build. Builders Risk premium is typically 1-4% of completed value — $5,000-$20,000 for the full project, paid as a single premium up front. Coverage typically lapses 12 months from start; large projects need extensions. At Certificate of Occupancy, the homeowner binds an HO-3 (or the carrier converts the Builders Risk to an HO-3 automatically if pre-arranged). Gaps between Builders Risk expiration and HO-3 binding are a documented loss pattern.
What to do
Buy a Builders Risk policy before breaking ground — never rely on the general contractor's policy alone, which typically protects the GC against liability but not the owner against loss to the structure. Confirm the policy covers the full insurable value (land excluded, hard costs included). Schedule HO-3 binding for the same day as Certificate of Occupancy; many carriers will pre-bind contingent on the C of O. If you are owner-acting-as-builder, verify the carrier accepts owner-builders — some require licensed GCs.