Ask ten insurance brokers whether course of construction insurance vs builders risk are the same thing and you will get ten different answers. The short version: they started as the same coverage under different names. The long version matters because modern policy forms have diverged in ways that affect what you collect after a loss.

General contractors who treat these terms as interchangeable risk missing coverage differences that show up only when a claim hits.

The Historical Connection

Both terms describe property insurance for buildings under construction. "Builders risk" is the American market term. "Course of construction" originates from the London/Lloyd's market tradition. Through the 1990s, you could swap one term for the other without any practical difference in coverage.

The ISO (Insurance Services Office) form CP 00 20 uses the heading "Builders Risk Coverage Form." Lloyd's and London market forms use "Course of Construction" or "Contractors All Risk (CAR)." Both cover the same fundamental exposure: direct physical loss to the structure being built.

The terms started diverging when the London market developed specialized construction endorsements in the early 2000s that the U.S. admitted market did not adopt at the same pace.

Where the Policies Differ Today

Five areas show meaningful differences between modern course of construction and builders risk policy forms.

1. Soft Cost Coverage

Standard U.S. builders risk (ISO CP 00 20): Soft costs are not included in the base form. You must add a separate soft cost endorsement. The endorsement covers delay-related expenses like loan interest, architect fees, and extended general conditions. It typically adds 5-15% to the base premium.

London market course of construction: Many London/Lloyd's forms include soft costs (called "delay in start-up" or DSU) as a standard policy section, not an endorsement. Coverage limits and waiting periods are negotiated as part of the base placement.

Feature	U.S. Builders Risk	London Course of Construction
Soft cost coverage	Optional endorsement	Often included in base form
Typical waiting period	30 days	14-30 days (negotiable)
Maximum indemnity period	6-12 months	12-24 months
Covered expenses	Loan interest, taxes, fees, lost income	Same, plus loss of anticipated profit
Premium impact	+5-15% of base premium	Included in base rate

Best practice: If your project has a construction loan, always secure soft cost coverage regardless of which policy form you use. Calculate a realistic delay scenario (3-6 months) and set the sublimit accordingly.

2. LEG Endorsements (London Engineering Group)

LEG endorsements define how the policy handles defective workmanship, design, or materials. This is where course of construction policies offer a level of clarity that standard builders risk forms often lack.

Three LEG endorsement versions exist:

LEG 1 (Outright exclusion): Excludes all damage from defective work, design, or materials. No coverage for the defective item or any resulting damage. This is the most restrictive approach.

LEG 2 (DE3 / Resulting damage covered): Excludes the cost of correcting the defect itself but covers resulting damage to otherwise sound work. This is the most common endorsement on commercial projects.

LEG 3 (Broadest coverage): Covers everything, including the cost of redesign and correction, unless the defect existed before the policy inception. Rarely available and expensive when offered.

LEG Version	Defective Item Covered?	Resulting Damage Covered?	Cost Impact
LEG 1	No	No	Lowest premium
LEG 2	No	Yes	Standard premium
LEG 3	Yes	Yes	Highest premium (+15-30%)

Standard U.S. builders risk (ISO): The ISO form excludes faulty workmanship but uses different language than LEG endorsements. The resulting damage question depends on the specific policy wording and state law, creating ambiguity that fuels claim disputes.

Best practice: Request LEG 2/DE3 wording on any policy over $5 million. This endorsement clearly separates the defective work (not covered) from the resulting damage (covered). The clarity saves months of claim negotiation.

3. Testing and Commissioning Coverage

Standard U.S. builders risk: Excludes damage during testing and commissioning of mechanical, electrical, and plumbing systems. You must add a separate testing endorsement.

London course of construction: Testing is typically included within the policy period with specific sublimits and conditions. The coverage extends to damage caused by testing failure, not just damage to the item being tested.

Scenario	U.S. Builders Risk (without endorsement)	London Course of Construction
Fire suppression test causes flooding	Not covered	Covered (standard)
Electrical commissioning causes fire	Not covered	Covered (standard)
HVAC testing damages ductwork	Not covered	Covered (up to sublimit)
Elevator testing causes shaft damage	Not covered	Covered (up to sublimit)

Best practice: Add a testing endorsement to any U.S. builders risk policy on projects with significant MEP scope. The endorsement costs 2-5% of the base premium. Without it, your most vulnerable phase (system commissioning) has no coverage.

4. Maintenance/Defects Liability Period

Standard U.S. builders risk: Coverage ends at project completion, occupancy, or policy expiration. No post-completion coverage beyond a short punch-list window (30-90 days).

London course of construction: Many forms include a maintenance or defects liability period (DLP), typically 12-24 months after project completion. During the DLP, the policy covers damage to completed work caused by defects that emerge after handover. The policy does not cover correcting the defect itself but covers resulting damage.

Example: Your project completes in March 2026. In September 2026, a defectively installed roof membrane fails during heavy rain, causing $80,000 in interior water damage. Under a London form with a 12-month DLP, the resulting interior damage is covered. Under a standard U.S. builders risk form, the policy ended in March and no coverage exists.

Best practice: If you can access London market forms (typically through a Lloyd's broker), the DLP provision alone justifies the placement for commercial projects over $10 million.

5. Waiver of Subrogation Treatment

Standard U.S. builders risk: Waiver of subrogation is an endorsement that must be specifically added to the policy. Without it, the carrier retains the right to pursue subcontractors who cause covered losses.

London course of construction: Most London forms include a blanket waiver as standard policy language. All named insureds, contractors, and subcontractors benefit from the waiver automatically.

Best practice: Regardless of which form you use, verify the waiver is in place. If your contract requires mutual waivers of subrogation (as AIA A201 does), the policy must match.

Side-by-Side Comparison Table

Coverage Feature	U.S. Builders Risk (ISO)	London Course of Construction	Advantage
Base coverage (structure + materials)	Included	Included	Tie
Soft cost / delay coverage	Endorsement (extra cost)	Often included	London
LEG / defective work clarity	Ambiguous policy language	Clear LEG endorsement options	London
Testing and commissioning	Endorsement (extra cost)	Typically included	London
Maintenance / defects liability	Not available	12-24 month DLP available	London
Waiver of subrogation	Endorsement	Usually standard	London
Transit coverage	Sublimited ($25K-$100K)	Negotiable, often higher	London
Availability for small projects	Widely available	Typically $5M+ projects	U.S.
Placement speed	7-10 days	2-4 weeks	U.S.
Premium level	Generally lower base rate	Higher base rate, fewer add-ons	Depends on endorsements needed

When to Use Which Form

Use a standard U.S. builders risk form when:

Your project is under $5 million
The construction type is straightforward (residential, simple commercial)
You do not need extensive soft cost or testing coverage
Speed of placement matters (binding within 7-10 days)
Your contract does not specify London market wording

Use a London course of construction form when:

Your project exceeds $10 million
The project involves complex MEP or structural systems
You want built-in soft cost and testing coverage
A defects liability period adds value
Your broker has Lloyd's market access
The project involves international parties or cross-border construction

For projects between $5-10 million: Compare both options. Request quotes from domestic carriers using ISO forms and from London market carriers using course of construction forms. Add the cost of endorsements to the U.S. form to compare apples to apples.

How This Affects Certificate Verification

When you review a certificate of insurance or policy for builders risk, the form type tells you what to expect.

If the certificate shows an ISO form number (CP 00 20 or similar), expect the standard U.S. builders risk structure. Verify that all necessary endorsements are listed.

If the certificate references a Lloyd's or London market form, expect broader base coverage but confirm the specific LEG version and DLP period.

In both cases, do not rely on the certificate alone. Request the policy declarations and endorsement schedule. SubcontractorAudit's COI tracking stores policy documents alongside certificates, making it easy to verify the actual coverage terms on every project.

FAQs

Can I request London market course of construction coverage on a U.S. project? Yes. Any U.S. project can be placed in the London market if it meets the minimum size requirements (typically $5 million and above). Your insurance broker must have Lloyd's market access, either directly or through a Lloyd's coverholder. Placement takes 2-4 weeks rather than 7-10 days for a domestic form. The extra time is worth it for complex projects where the broader London coverage prevents claim disputes.

Is course of construction insurance more expensive than builders risk? The base premium for a London form is often 10-20% higher than a comparable U.S. builders risk form. However, the London form typically includes soft costs, testing, and broader defective work coverage that you would pay extra for as endorsements on a U.S. form. When you add endorsement costs to the U.S. form, the total premium is usually comparable or even favors the London form.

Do lenders accept course of construction insurance instead of builders risk? Yes. Lenders care about coverage scope, not the policy form name. Provide the lender with the declarations page, coverage summary, and endorsement schedule. Most construction lenders are familiar with both forms. If a lender insists on specific ISO form numbers, your broker can usually negotiate acceptance of the London form by demonstrating equivalent or broader coverage.

What is a Contractors All Risk (CAR) policy? CAR is the international market term for a combined policy covering both first-party property damage (equivalent to builders risk) and third-party liability (equivalent to CGL) on a construction project. CAR policies are standard in Europe, Asia, and the Middle East. In the U.S., builders risk and CGL are typically separate policies. If you work on international projects, you will encounter CAR forms frequently.

How do I know which LEG version is on my policy? Look at the endorsement schedule attached to the policy. The LEG endorsement will be identified by version number (LEG 1, LEG 2, or LEG 3) or by its equivalent designation (DE1, DE2, DE3). If neither term appears, the policy uses whatever defective workmanship language is in the base form, which may be ambiguous. Ask your broker to clarify the defective work treatment in writing before binding.

Should I specify course of construction or builders risk in my subcontracts? Use the generic term "builders risk" in subcontracts unless the project-wide policy uses a specific London form. The subcontract should specify the coverage requirements (limits, endorsements, named insured status) rather than the form type. This gives you flexibility to place coverage with the best available carrier regardless of market terminology.