Builders risk insurance is an insurance which provides protection against damage to buildings or other type of structure while they are under construction. Normally the owner of the building buys this policy, but the construction contractor may buy it if it is mutually agreed in the construction contract.
Most of the lenders don't provide finance unless this coverage is in place. It protects against losses from fire, wind damage, terrorism, and physical damages. Many other types of losses like earthquake, flood, or theft may also be included in the policy, if needed.