Who is supposed to buy builders risk insurance, the owner or the contractor?

Either can. What matters is the construction contract. Many contracts (including standard AIA forms) place the duty on the owner, while design-build and spec projects often put it on the contractor. The party that buys it should confirm all other parties with an insurable interest are named on the policy.

Whose name goes on a builders risk policy?

The named insured should include everyone with an insurable interest in the project: the owner, the general contractor, and often major subcontractors, plus the construction lender as loss payee or mortgagee. Naming all interested parties avoids coverage disputes and subrogation fights after a loss.

Can a subcontractor be covered under the general contractor's builders risk policy?

Yes. Subcontractors have an insurable interest in their work and materials and can be added as named or additional named insureds. Doing so also supports a waiver of subrogation, which stops the insurer from suing a sub after paying a claim.

Does the bank need to be on the builders risk policy?

If there is a construction loan, yes. The lender almost always requires being listed as mortgagee or loss payee so that claim proceeds protect its collateral. This is usually a condition of funding.

Who Buys Builders Risk — Owner or Contractor? (And Whose Name Goes On It)

By Tamir Lerner · Builders Risk Insurance Pros · Updated July 22, 2026

Quick answer: Either the owner or the general contractor can buy builders risk insurance — the construction contract decides who is responsible. What matters more than who pays is whose name goes on the policy: the named insured should include every party with an insurable interest (owner, GC, often key subs), with the construction lender listed as loss payee or mortgagee. Get the named insured right and you avoid ugly disputes after a loss.

"Who is supposed to carry the builders risk?" is one of the most common questions on any project, and the source of a surprising amount of finger-pointing. The truth is that there is no single right answer to who buys it — but there is a right answer to whose name belongs on it. Getting the second part correct is what actually protects everyone when a fire or storm hits a half-finished building.

Owner or contractor: who is responsible for buying it?

Responsibility for purchasing builders risk is a contractual decision, spelled out in the construction agreement. There are three common patterns:

Scenario	Who typically buys builders risk
Owner-controlled project with a standard contract (e.g., AIA forms)	The owner, unless the contract shifts it to the contractor
Design-build or a GC delivering a turnkey project	The general contractor
Spec home or developer building to sell	The developer/builder, who is effectively the owner

Under widely used standard contracts, the owner often carries builders risk because the owner holds the largest financial stake in the completed asset. But many owners prefer the contractor to place it, and many contractors prefer to control it so they know the coverage is adequate. Either can work. What cannot work is both parties assuming the other one bought it — which is exactly how projects end up uninsured. The IRMI reference on builders risk emphasizes that the contract, not custom, should settle this.

The rule that matters: read the contract first

Before anyone buys anything, read the insurance section of the construction contract. It will usually state who provides builders risk, the minimum limit (often the full completed value), required perils, deductible caps, and whether a waiver of subrogation is required. Buy to satisfy that clause. If the contract is silent, negotiate it explicitly — do not leave it to assumption.

Whose name goes on the policy? Insurable interest is the key

This is where the real protection lives. A builders risk policy should name every party with an insurable interest — a legal or financial stake that would suffer a loss if the project were damaged. On a typical job, that includes:

The owner — owns the land and the completed structure.
The general contractor — has invested labor, materials, and profit at risk.
Major subcontractors — own their installed work and staged materials until acceptance.
The construction lender — has money at risk and wants its collateral protected.

When the policy names all of these interests, a single covered loss is settled under one policy without the parties fighting over who gets paid. When it doesn't, you get gaps and disputes — a sub whose materials burned may have no claim, or an insurer may pay the owner and then sue the contractor to recover.

Named insured vs. additional insured vs. loss payee

These terms get used loosely, so here is the distinction on a builders risk policy:

Named insured — a primary party the policy is written for, with full rights to file and collect on claims. Owner and GC are usually named insureds.
Additional named insured — added parties (often key subs) who also receive coverage rights for their interest.
Loss payee / mortgagee — the lender, listed so that claim proceeds flow in a way that protects its loan collateral. Not the same as an insured; it is a payment interest.

Getting these designations correct is not paperwork trivia. It determines who can actually collect after a loss and in what order.

Why naming all parties matters: waiver of subrogation

Subrogation is the insurer's right to step into your shoes and sue whoever caused a loss after it pays a claim. On a construction project, that can mean the builders risk carrier pays the owner for fire damage, then turns around and sues the subcontractor whose work started the fire — even though everyone is on the same team. A waiver of subrogation among the project parties, combined with naming those parties on the policy, shuts that down. Standard construction contracts frequently require it, and it is one of the strongest reasons to insure all interests under a single policy rather than a patchwork.

Practical guidance by project type

Owner building with a hired GC

Decide in the contract who carries builders risk. Whoever does, name both owner and GC, add the lender as mortgagee, and require a waiver of subrogation. Confirm the limit equals the full completed value.

Contractor on a design-build or spec project

The contractor typically buys and controls the policy. Still name any separate owner or investor and the construction lender, and make sure the completed-value limit and term match the real schedule.

Owner-builder / self-build

You wear both hats, so you carry the policy. Name yourself and your lender, and if you hire subs, consider naming the significant ones and requiring waivers of subrogation in your subcontracts.

Not sure whose name should be on your policy?
We structure builders risk so the owner, contractor, key subs, and lender are all correctly listed — no gaps, no post-loss surprises. Talk it through at buildersriskinsurancepros.com Call (818) 356-8150

The bottom line

Who buys builders risk — owner or contractor — is settled by the construction contract, and either party can carry it well. The higher-stakes question is whose name goes on the policy. Name every party with an insurable interest, list the lender as loss payee or mortgagee, insure to the full completed value, and require a waiver of subrogation. Do that, and when something goes wrong on the jobsite, you have one clean claim instead of a lawsuit between people who are supposed to be building together.

Builders Risk Insurance Pros is a division of Thrive Risk Management. This article is general information, not legal or insurance advice, and does not interpret any specific contract. Insurable-interest and named-insured decisions should be reviewed against your actual construction agreement and policy language with a licensed agent.