Here's something that confuses almost everyone in construction: builders risk and inland marine insurance sound completely different, but they're actually related. In fact, builders risk is a specialized form of inland marine coverage. The real question isn't which one is "better"—it's which one fits your specific situation. Are you building something from the ground up, or are you moving tools and equipment between jobs? That distinction makes all the difference.
Let's break down what each policy actually does, who needs what, and why you might need both. By the end, you'll know exactly which coverage protects your work—and your wallet.
What Builders Risk Insurance Actually Covers
Builders risk insurance, sometimes called course of construction insurance, exists for one purpose: protecting a specific construction project from start to finish. Think of it as insurance for the building itself while it's being built, plus all the materials that will become part of that structure.
The policy covers physical damage from fire, vandalism, theft, and most weather events (though severe weather like hurricanes may require additional coverage). Here's what makes it project-specific: it protects materials whether they're on-site, in transit to the site, or temporarily stored off-site waiting to be installed. Once installation happens, coverage continues. But once the project is substantially complete—usually around 90% done—the policy ends.
Most builders risk policies last no more than 12 months, though you can extend them if your project runs long. The cost typically runs between 1-4% of your total construction budget annually. For a $500,000 project, you're looking at $5,000 to $20,000 for coverage. Small businesses pay an average of about $1,259 annually, though nearly half pay less than $100 per month.
Since materials represent 40-50% of construction costs, this coverage is absolutely critical. Imagine you're halfway through building a commercial office space when a fire destroys $200,000 worth of installed HVAC systems and lumber. Without builders risk, that's coming out of your pocket—or your client's, depending on your contract. Either way, it's a disaster.
How Inland Marine Insurance Works Differently
Despite the name, inland marine insurance has nothing to do with boats or oceans. It's called "marine" for historical reasons—it evolved from coverage for goods transported on ships, then expanded to cover land transport too. Today, it's a "floater" policy that follows your property wherever it goes.
Unlike builders risk, which focuses on one specific project, inland marine protects your business property on an ongoing basis as it moves between locations. This includes tools, equipment, materials in transit, and property temporarily stored off-site. It's designed for businesses that constantly move assets around—contractors who work on multiple small jobs, subcontractors hopping between sites, electricians hauling expensive tools from house to house.
Traditional commercial property insurance only covers your stuff at a fixed location—your office, your warehouse. The moment you load your $15,000 worth of power tools into your truck and drive to a job site, that standard policy stops protecting you. Inland marine fills that gap. It covers theft, fire, wind, hail, water damage, and the two most common causes of losses: collisions and cargo theft.
Here's a real-world scenario: you're an HVAC subcontractor working on three different residential projects this week. Your van gets broken into overnight, and thieves make off with diagnostic equipment, torches, copper fittings, and specialized tools worth $8,000. Inland marine insurance replaces that equipment so you can keep working. Builders risk wouldn't help here because these aren't materials becoming part of a specific construction project—they're your working tools.
The Key Differences That Actually Matter
The fundamental difference comes down to duration and purpose. Builders risk is temporary and project-focused. Inland marine is ongoing and equipment-focused. Builders risk protects what you're building. Inland marine protects what you're using to build it.
Think about coverage location. Builders risk covers materials destined for a specific site—whether they're at the site, in transit to it, or temporarily stored nearby. Once those materials are installed, they're still covered until project completion. Inland marine doesn't care about any particular site. It follows your property everywhere, all the time, whether you're driving between jobs or storing equipment in your garage overnight.
Who purchases each policy also differs. General contractors and project owners typically buy builders risk for the entire construction project. It might even be required by your construction loan or contract. The owner, general contractor, or even subcontractors can be listed as insured parties, but there's one policy for the whole project. Inland marine, on the other hand, is purchased by individual businesses to protect their own tools and materials across all their jobs.
Installation timing matters too. With builders risk, once materials are installed into the structure, they remain covered as part of the building under construction. With inland marine, coverage typically stops once equipment or materials become permanently attached to a building or installation is complete. That's when they transition from movable business property to part of a fixed structure.
Who Needs What (And Why You Might Need Both)
If you're a general contractor managing construction projects, you almost certainly need builders risk. Most construction contracts and lenders require it. You're responsible for the entire job from groundbreaking to final inspection, and that means protecting everything that goes into the structure. For projects valued anywhere from a few hundred thousand to $75 million, builders risk is non-negotiable.
If you're a subcontractor, handyman, or tradesperson who bounces between multiple jobs, inland marine is your best friend. You're not building entire structures—you're installing plumbing, running electrical, doing HVAC, laying tile. Your expensive tools move with you daily. You might work on a project for just a couple days before moving on. In that scenario, protecting your equipment matters far more than insuring someone else's construction project.
But here's where it gets interesting: many construction businesses need both. A general contractor might carry builders risk for each major project while also maintaining inland marine coverage for company-owned equipment that moves between job sites. A large electrical contractor might have builders risk on a major commercial build while using inland marine to protect the diagnostic tools, wire spools, and equipment that travel with their crews.
The policies complement each other because they cover different exposures. Builders risk handles the big project-level risks—fire destroying a partially completed building, materials stolen from the construction site, wind damage to the structure. Inland marine handles the day-to-day operational risks—your truck getting broken into, equipment damaged in transit, tools stolen from a job site you're only visiting for a day.
Getting the Right Coverage for Your Situation
Start by asking yourself three questions: What am I building? What am I moving? How long will this last? If you're constructing a specific building or structure that will take months to complete, you need builders risk. If you're transporting tools and equipment between various job sites on an ongoing basis, you need inland marine. If you're doing both—and many contractors are—you need both policies.
Don't assume the builders risk policy on a project covers your personal tools and equipment. It doesn't. Don't assume your inland marine policy protects the building materials sitting at a construction site for weeks. It probably doesn't. Understanding the difference between these policies prevents expensive gaps in coverage.
Talk to an insurance agent who specializes in construction coverage. Explain your specific operations—the types of projects you take on, the value of equipment you transport, whether you're a general contractor or subcontractor. They can structure coverage that protects both your projects and your business assets without paying for redundant policies or leaving dangerous gaps. The right coverage means when something goes wrong—and in construction, something always eventually goes wrong—you can keep working instead of scrambling to replace thousands of dollars of lost materials or stolen tools.
