There is a coverage gap on nearly every reroofing project that most contractors never think about until a claim lands in it. The gap sits between what builders risk insurance covers and what your general liability policy covers, and it is precisely where some of the most common reroofing losses occur. Materials stolen from the staging area. A sudden storm damages newly installed decking before the membrane goes down. An installed roof section fails during a wind event before the project is accepted. These losses do not fit neatly into either builders risk or GL, and the result is a claim that bounces between policies while the contractor eats the cost.
Understanding where builders risk ends, where your GL picks up, and what falls through the middle is essential for any roofing contractor working on reroofs. The answer for most contractors is an installation floater, a coverage form specifically designed to fill this gap. But knowing when you need one, what it covers, and how it interacts with contractual risk transfer provisions in your roofing contracts requires a closer look at how each coverage type works on a reroof.
What Builders Risk Covers on a Reroof
Builders risk insurance, also called course of construction insurance, is designed to cover buildings and materials during construction. On a new construction project, builders risk is straightforward: it covers the structure being built from the ground up, including all materials and labor that have been incorporated into the building. The policy typically runs from the start of construction until the building is completed and occupied or until the policy period expires.
On a reroof, builders risk becomes more complicated. The building already exists. It is likely occupied. The structure itself is covered by the building owner property insurance, not by builders risk. Builders risk on a reroof, if it exists at all, covers the new roofing materials and the work of installing them. But the scope is narrow and the limitations are significant.
Most builders risk policies written for reroofing projects cover materials that have been delivered to the job site and are awaiting installation, and materials that have been installed but the project has not yet been completed and accepted. They typically cover losses from fire, wind, theft, vandalism, and sometimes water damage. However, builders risk policies almost always exclude damage caused by faulty workmanship. If your crew installs a section of membrane incorrectly and it fails, builders risk will not cover the cost to redo the work. It covers the result of external perils, not the result of your own errors.
On many reroofing projects, the building owner or GC carries the builders risk policy, not the roofing subcontractor. The contract usually specifies who is responsible for builders risk and what perils are covered. If the owner carries builders risk, the roofing contractor may have limited control over the policy terms, deductibles, and exclusions. If the contract is silent on builders risk, there may be no builders risk coverage at all, which means the gap between property coverage and GL coverage is even wider.
Here is the critical detail: builders risk does not cover the roofing contractor liability. It covers the property, the materials, and the work in progress against specified perils. If the partially completed roof allows water to enter the building and damage the owner inventory or equipment, builders risk may cover the new roofing materials but not the interior property damage. That interior damage is a liability claim that hits your GL policy. And as we will see, your GL policy has its own limitations on reroofing work.
The GL Your Work Exclusion
Your general liability policy contains an exclusion that is directly relevant to every reroofing project: the "your work" exclusion, formally known as Exclusion L in the standard CGL form. This exclusion eliminates coverage for property damage to "your work" arising out of your work or any part of it. In plain language, if the roof you installed is defective and the roof itself is damaged as a result, your GL policy does not cover the cost of replacing or repairing your own work.
This is a fundamental concept that many roofing contractors misunderstand. GL covers damage to other people property caused by your work. It does not cover damage to your work itself. If your reroof fails and water damages the building interior, your GL should cover the interior damage, but not the cost of redoing the roof. That cost comes out of your pocket or out of a warranty obligation.
The subcontractor exception to the your work exclusion adds a wrinkle. If the damage to your work was caused by work performed by a subcontractor, the your work exclusion may not apply, and your GL policy may cover the cost of repairing your work. This is why some contractors structure their operations to use subcontractors for specific trades: the subcontractor exception to the your work exclusion can provide coverage that would otherwise be excluded for self-performed work.
During a reroofing project, the timing of the your work exclusion matters. While the work is in progress, your GL ongoing operations coverage applies. If a crew member drops a tool through a skylight and damages the building interior, that is a standard GL claim for property damage to a third party arising out of your ongoing operations. The your work exclusion does not apply to ongoing operations claims because the work is not yet completed.
Once the project is completed, your completed operations coverage takes over. Claims arising from defective completed work, such as a leak that develops six months after the reroof, are completed operations claims. The your work exclusion typically applies to completed operations claims, meaning the cost of replacing the defective roof section is excluded, but the resulting water damage to the building interior should be covered under your completed operations coverage.
The practical impact of the your work exclusion on reroofing projects is significant. The gap between what builders risk covers (materials and work in progress against external perils) and what GL covers (damage to other party property caused by your work, but not damage to your work itself) leaves a category of losses that neither policy covers: damage to your own materials and installed work caused by your own errors or by perils that occur during the construction period.
Installation Floater as the Middle Ground
An installation floater is a type of inland marine insurance designed specifically to cover materials and equipment being installed by a contractor. For roofing contractors, an installation floater fills the gap between builders risk and GL by covering roofing materials from the time they are shipped from the supplier until they are installed, tested, and accepted by the project owner.
Unlike builders risk, which may be carried by the building owner, the installation floater is your policy. You control the coverage terms, the limits, the deductibles, and the claims process. Unlike GL, which excludes damage to your own work, the installation floater covers your materials and installed work against a broad range of perils including fire, wind, theft, vandalism, water damage, and in some forms, collapse and equipment breakdown.
An installation floater for a roofing contractor typically covers materials in transit from the supplier to the job site, materials stored at the job site awaiting installation, materials stored at your warehouse or yard, and work that has been installed but not yet accepted by the owner. The coverage usually includes labor costs to reinstall damaged materials, which is critical because labor is often the most expensive component of a reroofing project.
The limits on an installation floater can be structured per project or as a blanket limit covering all projects. For a roofing contractor with a typical project size of $50,000 to $200,000 in materials, a per-project limit of $250,000 with a blanket limit of $500,000 to $1,000,000 is common. The premium for an installation floater is modest relative to the coverage, typically ranging from $1,500 to $5,000 annually depending on the limit, the deductible, and the volume of work.
Some installation floaters also cover delay expenses. If a covered loss damages materials or installed work and causes a project delay, the floater can cover the additional costs associated with the delay, including extended general conditions, overtime labor to get back on schedule, and penalty charges under the contract. This coverage is particularly valuable on commercial reroofing projects where delays trigger liquidated damages.
One important limitation of most installation floaters: they do not cover faulty workmanship. If your crew installs a membrane incorrectly and it fails, the floater does not cover the cost of reinstallation any more than builders risk does. The floater covers damage from external perils, not from your own errors. For workmanship failures, you are looking at either absorbing the cost, pursuing a manufacturer warranty claim if the failure is material-related, or relying on your GL completed operations coverage for any resulting damage to other property.
Contractual Risk Transfer on Reroofs
The contract between you and the building owner or GC determines who bears the risk for various types of losses during the reroofing project. This contractual risk transfer is implemented through indemnification clauses, insurance requirements, and waiver of subrogation provisions. Understanding how these contractual provisions interact with your insurance is the final piece of the coverage puzzle on a reroof.
Indemnification clauses in reroofing contracts typically require the roofing contractor to indemnify and hold harmless the building owner and GC for claims arising out of the contractor work. The scope of the indemnification varies by contract and by state law. Some states limit indemnification to claims caused by the contractor negligence (comparative fault indemnity). Others allow broader indemnification. Your GL policy covers your obligation to indemnify others through the contractual liability coverage part, but only if the indemnification arises from an "insured contract" as defined in the policy.
Most standard reroofing contracts qualify as insured contracts under the GL policy definition, which includes any contract relating to the contractor business. However, some overly broad indemnification clauses can push the obligation beyond what your GL policy covers. If the contract requires you to indemnify the owner for claims arising from the owner own negligence, your GL contractual liability coverage may not respond. Have your agent or an attorney review the indemnification clause in every commercial reroofing contract before you sign it.
Waiver of subrogation provisions in reroofing contracts are also common. A waiver of subrogation prevents your insurance carrier from pursuing the building owner or GC for losses that your policy pays. For example, if the building owner negligence contributes to a loss on the project, a waiver of subrogation prevents your carrier from recovering against the owner. You need to add a waiver of subrogation endorsement to your GL and workers comp policies to comply with these provisions. As discussed in our article on certificate mistakes, this endorsement must be on your policy, not just referenced on the certificate.
The insurance requirements in the reroofing contract dictate the minimum coverages and limits you must carry, who must be named as additional insured, and whether your coverage must be primary and non-contributory. Meeting these requirements is a condition of the contract, and failure to comply can be a breach that exposes you to liability beyond what your insurance covers.
The gap between builders risk and GL on a reroof is real, but it is manageable. An installation floater fills the property coverage gap. Proper understanding of the your work exclusion helps you set expectations about what GL does and does not cover. And careful attention to the contractual risk transfer provisions in your reroofing contracts ensures that you are not assuming more risk than your insurance program can support. Talk to a roofing insurance specialist about structuring your coverage program for the reroofing work you actually perform.