Builder’s risk insurance coverage

If you’re building a new home or cottage, or making major renovations to an existing one, it would be wise to protect yourself and your investment with Builder’s Risk insurance. The larger your project, the more critical this coverage becomes. In fact, you may have already discovered that your bank or lending institution is insisting upon it if you are borrowing money.

Why builders risk insurance?

Builder’s risk insurance is essential for any new construction project, and for major renovations that involve structural changes to a building. A standard property policy does not cover a building while it is under construction/renovation.

  • If you’re a contractor, developer or builder and your firm is erecting homes or other structures, you need a builder’s risk policy to cover these buildings while they are under construction.
  • If you are building your dream home and acting as your own general contractor, you need a builder’s risk policy.
  • If you are a home or business owner and you are doing major renovations/additions that require structural changes to the building, you need to make sure that the contractor has builder’s risk insurance for the project, or you can buy it yourself.

What’s covered?

Builder’s Risk insurance will protect your significant investment, and cover the project for:

  • Losses from fire
  • Lightning
  • Wind
  • Vandalism during construction
  • Theft
  • Liability insurance is also typically packed into the policy to protect you if people are hurt on your job site

Have you thought about fences around your construction? This simple step can go a long way in preventing theft and injuries. And be sure your location is well lit at night since this can be a strong deterrent against losses. These may also be conditions of your insurance.

In addition, should one of the situations mentioned above occur, your Builder’s Risk policy will cover:

  • The cost of debris removal
  • The value of building materials
  • Any physical loss or damage to the property
  • Soft costs such as additional engineering, architectural and/or legal fees

While it is recommended to have a Builder’s Risk policy in place before work begins, you can still obtain one during your project to cover you until completion. However it is much harder to get a Builder’s Risk policy once the project is underway; your options for companies and coverage are certainly reduced.

Frequently asked questions about builder’s risk insurance

Who usually buys builders risk insurance?

Builder’s risk insurance is usually purchased by a builder or general contractor that is in charge of a new construction or renovation project. In some cases, individuals undertaking a construction or renovation project will buy builder’s risk insurance for the duration of the project, particularly if they are acting as their own general contractor.

Who needs (is required) to have builders risk insurance?

Depending on where your construction/renovation project is taking place, it’s very likely that the city or whatever body issues building permits will ask to see proof of a builder’s risk policy. It doesn’t matter who buys the policy, the owner of the building or the contractor doing the work, but both parties typically need to be named in the policy.

What does builder’s risk cover?

A builder’s risk policy typically covers you for a lot of the same things that a homeowners policy covers:

  • Losses from fire, wind or lightning
  • Losses from vandalism or theft. This includes theft of building materials, but also theft of personal items from your home while it is under construction
  • Liability, if non-construction personnel are injured at the worksite, can usually be added

Who offers builders risk insurance?

Builder’s risk insurance can be sold either as a personal insurance or business (commercial) insurance policy (it usually depends on the size and type of building project). If your home insurance company doesn’t offer this coverage, you can get this as a separate policy with a different insurance company. Feel free to call and speak to one of our top-notch business insurance specialists to discuss your options.

When does builder’s risk insurance end/expire?

Builder’s risk policies are usually sold for a minimum of six months, and can be extended depending on the length and complexity of your project. It is important that you ask for your coverage to start before the project commences (e.g. before digging foundations).

How much is builders risk?

A builder’s risk policy is priced based on a number of factors, including:

  • Replacement value of the building and building materials
  • Complexity of the project
  • Location of the project and crime levels in that area
  • Past claims experience of the business and/or homeowner

As an example, for a million-dollar home in Toronto (replacement value of $250,000) undergoing an $80,000 renovation, you can expect to pay around $1,000 for a six-month builder’s risk policy.

To find out more about how Builder’s Risk insurance can protect your Ontario construction or major renovation project, please call us at 1-800-731-2228 or email us at