Of all the coverages a contractor carries, builder’s risk is the one I see misunderstood most often, and the one that causes the most painful surprises when something goes wrong mid-project.

Part of the problem is the name. “Builder’s risk” sounds like a single, simple product. In practice, it’s one of the more nuanced policies in a contractor’s program, and the details that get glossed over at binding are almost always the details that matter when there’s a fire, a storm, or a theft on an active job site.

Here’s what every contractor should actually understand about this coverage, before you need it, not after.