Does builder's risk insurance cover water damage?
Usually yes, when the damage is sudden and accidental: a burst line, a failed fitting, an overnight release. What the policy never restores is the schedule, the deductible or the rework. Water is one of the most frequent causes of loss on active construction sites, and monitored detection with automatic shutoff keeps the event small enough that coverage is rarely the question.
What builder's risk covers, and what it never restores
Sudden and accidental water damage to the insured works is usually covered: a burst supply line, a failed fitting, a sprinkler discharge. What no policy restores is the schedule slip, the deductible erosion, the rework and the trades standing down while the affected floors dry.
Usually covered: sudden pipe and fitting failures, accidental discharge, storm water through an open structure
Commonly excluded or limited: gradual seepage, faulty workmanship as a cause, water damage after occupancy begins
Never restored: the schedule, the deductible, the rework and the handover date
The line that decides severity is time: a leak isolated in minutes stays a punch-list item
Construction water risk, measured
- Average damage per construction leak across the monitored portfolio
- $31,200
- Of construction water events start after hours
- 41%
- Damage prevented across 11 active PCL projects
- $8.3M
The 2026 State of Water Risk Report and documented project outcomes
The riskiest window is wet, tested and unoccupied
Once domestic lines are pressurized and finishes are going in, a single overnight failure can run for hours before the first trade arrives. A high-rise office project monitored through 16 months of construction prevented over $1M in damage from events that would otherwise have run all night.
Eddy installs with the schedule: sensors move up the building with the work, flow monitoring watches the pressurized lines, and the monitoring center calls the project's contacts through the escalation protocol the moment something fires.
Sensor coverage moves with the construction schedule, floor by floor
Automatic shutoff on the risers and mains that are already live
Operators call the project contact list through the escalation protocol, around the clock
The same hardware carries into operations after handover, no second install
Documentation the carrier recognizes
Every event produces a documented chain: detection timestamp, response log, isolation time and outcome. That record supports the claims conversation when one happens and the renewal conversation every year. Carrier credits for documented mitigation vary by program, so ask your broker what your policy recognizes.
Leak Incident Reports formatted for carriers and brokers
Response-time and uptime data in carrier-ready formats
Premium credits are carrier-dependent, ask your broker what your program recognizes
Builder's risk, also sold as course of construction insurance, covers a building while it is being built. This page is about the construction phase. For operational buildings and premium savings at renewal, see the insurance savings page.
Water damage accounts for roughly a third of construction losses and costs the US industry an estimated $16 billion a year (Nationwide Agency Forward, 2023). The exposure peaks after the building is wet, tested and pressurized, and before it is occupied and watched.
Builder's risk questions
Property insurance for a building under construction. It covers the structure, materials and equipment on site, in transit and in storage against sudden loss, from groundbreaking until the project is completed or occupied.
Typically the insured works and materials against fire, wind, theft, vandalism and sudden water damage. Policies vary widely: soft costs, delay in completion and water damage sublimits are negotiated, so the schedule of coverages matters more than the label.
Usually yes for sudden and accidental events, like a burst line or a failed fitting. Gradual seepage and damage from faulty workmanship are commonly excluded or limited, and some programs apply separate water damage deductibles or sublimits. Check the policy language, and keep the event small enough that the question stays theoretical.
Whoever the contract assigns it to, usually the owner or the general contractor. The party with the insurable interest buys the policy, and the cost typically lands in the project budget either way.
It is typically priced as a fraction of the completed value of the project and varies with construction type, location, duration and water damage history. Frame protection, long schedules and wet trades price higher. Documented water mitigation is one of the levers a broker can actually negotiate with.
Yes. Course of construction, COC and builder's risk are the same product under different names. Canadian markets tend to say course of construction, US markets builder's risk.
Builder's risk ends at completion or occupancy and the building moves to an operational property policy. Monitoring that installed during construction carries over, and the documented history it produced becomes renewal evidence. See the insurance savings page for the operational side.