Insurance Terms Builders Nod Along To

Most builders have nodded through a conversation about “additional insured” without asking what it actually means. No judgment or shame, we’ve all been there.

It happens at sub onboarding. It happens at renewal. Someone says, “Make sure we’re additional insured, with a waiver of subrogation, and that completed ops is in place.” Everyone agrees, and the email gets sent.

Nodding is fine, until a claim shows up and those words have to do real work. Here are four terms that come up on almost every job: what they mean, where builders get surprised, and the one question worth asking about each.

Additional Insured: “We’re on their policy”

What it means: An additional insured is someone added to another party’s policy so they’re protected for claims tied to that party’s work. For builders, it usually means being named on a subcontractor’s General Liability policy.

Where it matters: A homeowner sues over water damage and names you, but a sub’s work caused it. If you’re properly an additional insured on the sub’s policy, their insurer may help defend and cover you, instead of everything landing on your own policy.

The nod-along trap: A certificate of insurance that says “additional insured” is a summary, not the coverage. The endorsement attached to the policy controls what you actually get, including whether it covers ongoing work, completed work, or both. Coverage is also usually limited to claims arising from that sub’s work, and it shares the sub’s limits with anyone else listed.

Ask this: “Can I see the endorsement, and does it cover completed operations too?”

Waiver of Subrogation: “Don’t come after us for it”

What it means: Subrogation is an insurer’s right, after paying a claim, to recover that money from whoever caused the loss. A waiver of subrogation is an agreement, made in advance, that the insurer won’t do that against a named party.

Where it matters: A sub’s employee is hurt on your site. The sub’s workers’ comp carrier pays the claim, and without a waiver it can then seek to recover that money from you. That’s why builders commonly require subs to waive subrogation against them. One limit to know: the waiver stops the carrier from coming after you, but it does not stop the injured worker from suing you directly. It can run the other way too: on a builder’s risk policy, a waiver can stop your carrier from chasing a sub who caused a loss, which subs often ask for.

The nod-along trap: Putting it in the contract isn’t enough. The waiver generally has to appear on the policy itself, usually by endorsement, and carriers may charge extra for it. Rules also vary by state. A subcontract that promises a waiver the policy doesn’t provide gives you a paper promise and no protection.

Ask this: “Is the waiver endorsed on the policy, and does it match what our subcontract says?”

Completed Operations: “The claim that arrives after closing”

What it means: Completed operations coverage responds to injury or damage that happens after your work is finished and turned over, but traces back to that work. For a home builder, that means after closing.

Where it matters: This may be the most important term on the list for builders, and the one discussed least. A build lasts months. Liability lasts years. A slow leak behind a wall can surface long after the crew has left and the buyers have moved in.

The nod-along trap: There are two. First, completed operations generally responds to resulting damage, like ruined flooring and drywall, not the cost of redoing the faulty work itself. That gap is where a warranty comes in. Second, exclusions can quietly shrink the coverage. Standard policies include an exception that can help a builder when a subcontractor’s work damages the home, but some policies remove it with a subcontractor work exclusion, which hits exactly the work most builders subcontract. Courts and states differ on how this plays out. And if you change carriers or slow down your building, ask how claims on homes you've already sold will be handled, since some new carriers exclude homes completed before the policy started.

Ask this: "Does my completed operations coverage include work done by my subcontractors?"

Deductible: "What you pay first"

What it means: A deductible is the amount you pay before the insurer pays. Everyone knows that. The surprises are in how it gets applied.

Where it matters: On storm-prone builds, a Builder's Risk policy may carry a percentage deductible for wind or named storms, calculated from the insured value rather than a flat dollar amount. On a $400,000 home, a 2% deductible is $8,000 before coverage responds. Depending on the policy, that can apply to each home, so a storm that hits several at once multiplies it.

The nod-along trap: Taking the highest deductible for the lowest premium without asking how many times it can apply. Liability policies add another wrinkle: a self-insured retention works differently from a deductible, because you typically handle the first dollars of a claim yourself before the insurer steps in.

Ask this: "Does this deductible apply per claim, per home, or per storm, and are there different deductibles for wind, hail or water?"

Nod Once, Then Ask Once

• Additional insured: Can I see the endorsement?
• Waiver of subrogation: Is it on the policy, not just in the contract?
• Completed operations: Does it include my subs' work?
• Deductible: How many times can it apply?

None of these terms are complicated. What trips builders up is that each one lives in the policy wording, not in the conversation. A quick review with someone who reads builder policies every day is often the fastest way to find out what you really have.

Maverick works exclusively with home builders. We'll review your general liability, subcontractor requirements and overall coverage structure and show you how everything fits together. Contact your Maverick representative to schedule a coverage review.

Know the words. Read the wording. Ask the question.

This article is for general educational purposes and does not constitute legal or insurance advice. Coverage depends on the specific policy terms, endorsements and applicable state law. Review your policies with a licensed insurance professional.