As any contractor or homeowner in Ontario who has been involved in a renovation or new home construction can tell you, builder’s risk insurance is a very important safety net to have in place while the project is ongoing.
WHAT IS BUILDERS RISK INSURANCE?
Also known in some circles as “Course of Construction insurance” or “Contractors All Risk insurance” (CAR), builders risk insurance is a specific type of property insurance that offers protection to homeowners during renovations or construction of their home.
It protects their material, fixtures and equipment that’s being used in the building project in the event they were to become damaged or lost due to an insured peril (list below).
GET A FREE BUILDERS RISK INSURANCE QUOTE
BUILDERS RISK INSURANCE VS. GENERAL LIABILITY INSURANCE?
While builders risk insurance is there to cover the unfinished construction itself in the event of something like a fire, it does not cover third-party negligence. That’s where general liability insurance comes in.
General liability insurance is there to indemnify losses related to property damage or injury resulting from negligence on the part of the contractor or their crew.
Both are often used in the construction industry.
WHO IS RESPONSIBLE FOR GETTING BUILDERS RISK INSURANCE?
Builders risk insurance is a comprehensive policy that helps protect everyone involved in the project including:
- Contractors
- Sub Contractors
- Homeowners
- Developers
- Financial Lending Institutions
So then who is responsible for making sure it’s in place and covering the costs?
Since both the contractor and homeowner are often equally at risk it’s the responsibility of one of them to secure it.
Which one gets it depends on the project and individuals involved.
Some contractors make it standard policy to take care of it as part of their service to the property owner, while some home owners prefer the hands-on control of obtaining it themselves.
Regardless of who obtains the builders risk insurance policy, they should ensure all involved parties are listed and covered on the policy.
WHAT DOES BUILDERS RISK INSURANCE COVER?
Builders risk insurance offers a few different types of coverage including:
1\ PROPERTY DAMAGE
(i.e. fire, explosion, hail, lightning, theft and vandalism)
2\ EXPENSES
(i.e. rental income, lost sales, taxes and loans)
3\ SPECIFIC ITEMS
(i.e. scaffolding and other temporary structures)
This means that material and equipment involved in the construction project would be covered in the event of a fire.
It also means, such as in projects involving the landlord of a rental property, that any lost income as a result of the insured accident may be covered by the policy.
HOW MUCH DOES BUILDERS RISK INSURANCE COST IN ONTARIO?
When getting quotes for builder’s risk insurance in Canada, the insurance provider will likely need to know:
- Scope of project
- Buildings location, size and value
- Expected timeline
- Contractor(s) involved
- Your claims history
One of the ways to determine what the insurance limit should be on the policy is to refer to the construction budget.
For a rough estimate of what builder’s insurance may cost, look at between 1% and 4% of the total project cost.
So if you received an estimate from a contractor of $50,000 the builders’ risk insurance policy should cost somewhere between $500 and $2,000.
Contact us for a builders risk insurance quote today.
Builders risk insurance is often offered in 3, 6 or 12-month terms depending on the estimated timeline of the construction. If the project is not completed by the end of the term, the policy can be renewed.
Erie Mutual Insurance proudly serves the small business insurance, farm insurance, home insurance and auto insurance needs of members throughout Southern Ontario including Haldimand, Niagara and Hamilton.
Please don’t hesitate to contact us with any questions you may have about this or any other topic related to your insurance.
