What Are Soft Costs in Builders Risk Insurance?

Builders risk coverage is a vital safety net for construction companies, shielding them from financial perils when unforeseen circumstances arise. Yet this coverage alone may not cover all the costs of construction projects, including the soft costs that can significantly impact a project’s bottom line. 

Every business owner should understand the ins and outs of builders risk insurance, the significance of soft costs, and the additional coverage options available to safeguard construction projects. This article provides the insights you need to ensure adequate coverage.

What Is Builders Risk Insurance?

Builders risk coverage protects businesses involved in construction projects. It covers damage or loss to a building or structure under construction due to various perils, such as fire, vandalism, and natural disasters. 

Builders risk policies typically cover the structure itself, including the building, materials, and construction machinery. It also covers temporary structures, including scaffolding and construction tools.

It may also cover a loss of income due to project delays caused by covered perils. 

This insurance is a lifeline for construction businesses, offering protection against significant financial losses and ensuring projects can continue despite unexpected setbacks.

Check Your Soft-Cost Coverage

Soft cost refers to non-tangible expenses, including project management, architect fees, legal costs, and financing. These costs can account for a substantial portion of a project’s budget. They are not directly tied to any physical construction but are crucial for the project’s success.

Project delays lead to extended financing, legal fees, and additional architectural and project management expenses. Unforeseen design changes may require architectural adjustments, incurring extra costs. Also, the legal costs can be substantial if disputes arise over project delays.

One of the significant issues with standard builders risk policies is they often do not cover these costs. Furthermore, construction firms may not be aware of the exclusion, which can leave them vulnerable to severe financial consequences when unforeseen events impact the project. Excluding soft costs can cause financial strain, completion delays, and even reputational harm.

Additional Coverage Options

Businesses have a few options to mitigate their soft-cost risks and address builders risk exclusions. As you explore builders risk policies, be sure to ask your agent about these solutions.


Many insurance providers offer soft-cost endorsements that you can add to a standard builders risk policy. These endorsements specifically cover these costs and provide the additional protection needed.

Standalone Policies 

Some businesses opt for standalone soft-cost insurance policies, which focus exclusively on these expenses. While these business insurance policies may come at an additional cost, they provide comprehensive coverage.

Are Your Soft Costs Covered?

Builders risk coverage is an essential safety net for construction projects. However, you should not overlook the importance of soft-cost coverage. Understanding the impact of soft-cost insurance can help ensure your projects have adequate protection.

Working with an experienced provider can help you get the coverage you need for your situation. Provident Protection Plus offers tailored packages with either standalone policies or endorsements to meet your needs. We have the expertise to guide you through your business coverage options and the critical considerations for your company’s soft-cost and builders risk insurance needs.

About Provident Protection Plus

For more than 65 years, Provident Protection Plus has served businesses and residents across several states nationwide. Today, we are a wholly owned subsidiary of Provident Bank, the region’s premier banking institution. To learn more about our coverage options, contact our specialists today at (888) 990-0526.