Which of the following best describes builders risk insurance?

Builders risk insurance is specifically designed to cover the risks associated with property damage during the construction process. This type of insurance provides financial protection against losses resulting from incidents such as fire, theft, vandalism, and certain types of weather damage while the project is underway.

The reason this insurance is essential during construction is that various hazards can arise before the building is completed and occupied. It typically covers the building under construction, as well as materials, fixtures, and equipment that are intended to become a part of the completed project.

By covering risks that are unique to the construction phase, builders risk insurance plays a vital role in safeguarding the financial interests of builders, contractors, and property owners against unforeseen events, ensuring that if losses occur, they won’t severely impact the project's overall budget.