Builders risk insurance

Region: Ontario Answer # 2765

What is Builders Risk insurance?

Builders Risk insurance covers damages that may occur to a building or building supplies during construction or renovation. It protects a person’s or organization’s insurable interest in the building and building supplies should they be lost or damaged during the construction or renovation work. To have an insurable interest means to own the property or have a financial interest in the property (such as a mortgage).

Builders Risk insurance is prudent to have during larger construction builds or renovations because home owner’s policies usually only cover small renovations, such as non-load bearing walls in a build.

Before beginning construction, property owners should ensure that both they and the general contractor have the right type and amount of insurance coverage, including:

Types of coverage

Generally, there are three types of coverage offered under a Builders Risk insurance policy:

  1. Hard Cost coverage provides coverage to the project structure, building materials, fixtures and equipment should physical loss or damage be sustained from a covered event, as such as fire, wind, theft and vandalism.
  2. Soft Cost coverage will cover associated costs for losses such as engineering, financing, architectural and legal fees.
  3. Loss of Business Income coverage is for financial loss associated with loss of use of the structure.

Who needs Builders Risk insurance?

Builders Risk insurance is bought by:

  • builders,
  • general contractors working on renovation or builds they are undertaking on the behalf of their client,
  • subcontractors, and
  • individual property owners who are acting as their own general contractor on a construction project.

What is the difference between Builders Risk insurance and Contractor Liability insurance?

Contractor Liability insurance provides coverage for property damage or bodily injury due to accidents on the job, while Builders Risk insurance covers damage or loss to the building or building materials due to events such as fire, wind, theft and vandalism. As well, while Contractor Liability insurance provides protection during and after a project is completed, Builders Risk insurance ends when the work has been completed and the property is ready for use or occupancy.

For more information about builders risk insurance, or to purchase a policy, contact Ai Builders Risk Insurance.

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