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The project is straightforward - renovate your client's house, located in Mississauga. The client’s roof is the main priority and needs fixing. So, like all good contractors, you have done your homework, surveyed the home, and determined what needs to be fixed and what doesn't. You've got the equipment, material and help needed to complete the project. And you know what? You are doing a fantastic job. So, when you discover vandals entered your client's home and damaged the roof, you were concerned. However, knew you were protected because you had builder's risk insurance.
The simple truth is that all construction projects, irrespective of the size or the level of complexity, come with a set of risks. True, experience and taking the right safety measures significantly reduce such risks, but having builder's risk insurance gives you, as a business owner, an extra layer of protection.
Sometimes also known as course of construction insurance or builders all risk insurance, builder's risk insurance is a particular type of property insurance that protects and safeguards homeowners and small business owners financially during renovations or construction. From the material to the fixtures, from equipment to legal fees, that were used during the building or construction of the project can be protected.
Just ask any contractor or homeowner in Ontario who has had some form of home construction or renovation to tell you that having a safety net, like builder's risk insurance, is important, especially when you have an ongoing project. So, let's understand more about this insurance.
Why should you have builder's risk insurance?
As mentioned earlier, a builder's risk insurance is a form of property insurance. It provides protection for buildings under renovation, construction, or repair. It basically fills in the gap that home insurance doesn't include.
For contractors, it would be good to consider purchasing builder's all risk insurance when you begin a new project. So, in the event a fire breaks out or a storm arises, damage to the construction will not leave you in a financial downfall. The policy can pay for the following:
- Debris removal
- Legal fees or architectural costs
- Stolen, damaged or destroyed building materials.
A contractor is given protection from the moment the project has begun until it is fully completed. After this, your client's building insurance will likely cover any damages that could occur. In terms of premiums, in Ontario your premiums are impacted by when the project will be completed. Any timeline extensions can require further premiums.
Builder’s risk can include protection for anyone associated with the project, including:
- Financial lending institutions
Who should be getting a builder's risk insurance?
Whether you are a DIY homeowner or professional contractor, purchasing builder’s risk insurance when building a new home or repairing an existing one is key.
What does a builder's risk insurance cover?
Your builder's risk insurance is likely to cover the following:
- Bad weather: When bad weather hits, it can harm ongoing projects if safety measures are not in place or are inadequate. At times, even with all the safety measures, calamities like strong winds can destroy all the hard work you have done. It can also be damaging to building materials, leaving them unusable. A builder's risk insurance will absorb the cost of such destruction and compensate you for rebuilding and materials.
- Theft: A construction or renovation site is not open throughout the day, and a thief can gain access during off-hours. They can rob materials for buildings and other valuables, leaving you at a loss.
- Vandalism: As mentioned earlier, a building site during off-hours can be accessed by unsavoury characters like vandals who could trespass and damage your work and equipment.
- Fire: There is also a chance a fire may break out due to construction or even from the surrounding areas, like forest fires. This could quickly damage most of your hard work. Plus, on any ongoing renovation or home construction project, there are a number of flammable materials lying around.
What does a builder's risk policy not cover?
In most cases, a builder's risk insurance is not likely to cover the following situations:
- Equipment left at the job site: Well, your contents insurance should cover you for tools. Thus, your builder's risk insurance will not cover any losses or destruction to any equipment.
- Losses before or after construction starts: For instance, you completed a project and left your tools in the shed. If a fire were to break loose, then any loss suffered would not come under the builder's risk insurance as it doesn't protect the contractor or the homeowner if the project is completed. In the same way, before construction begins, any damages will not be covered under the buyer's builder's risk policy.
- Faulty design: If there is a change in design or faulty design, any damage, loss, or destruction due to such an error is not within the bounds of the builder's risk policy. Most probably, professional liability insurance will pay for any of these damages.
It can be challenging to figure out what level or how much insurance you need for your business. We recommend reaching out to a trusted broker like Five Star Insurance Brokers to get discuss your needs and get a free builder's risk insurance quote in Ontario.
They will help you find cost-effective, high-quality builder's risk insurance in Ontario. With so many coverage options, finding quality coverage for your business can be time-consuming. Five Star Insurance Brokers make it easy by vetting and carefully selecting the best insurer for you. We have been serving our client’s insurance needs since 2009.
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