You have the plans, the permit and the material is ready to be delivered, but do you have insurance? Purchasing insurance is an integral part of your project. Losses incurred during the construction process can be financially devastating.

Whether you are building new or renovating an existing building, you should have Builder’s Risk Insurance (also known as Course of Construction). These policies protect your interest in materials, fixtures and equipment if they are lost or damaged due to an insured peril.

Either the contractor or the building owner can purchase these policies. It is important to discuss who will be responsible for making this purchase before the project starts. The policy should provide coverage from the date the shovels enter the ground until the project is complete, at which time the building owner is responsible for purchasing appropriate coverage.  You can tailor the policy to reflect the nature of your project and the risks you might face.

Common Builder’s Risk Claims

• Wind – 28%
• Water seepage or leakage – 10%
• Arson or fire – 8%
• Vandalism – 3%
• Collapse – 5%

Knowing your Risks

The location of the project can increase the risk of certain events happening and lessen others. For example if the project is next to a water body the project is at greater risk for flooding and you will want to make sure that the policy includes coverage for this but you might be able to remove earthquake coverage if you are not in an area prone to them.

Things to consider are:

• Is the site visible from the road and therefore less prone to vandalism or theft?
• How close is to a body of water or is it located in an area prone to flooding?
• Is the site protected from potential damage by windstorms?

Other Factors to Consider

• What is the size of the project?
• What is your schedule?
• What is the budget?
• Where are your materials kept?
• Has the budget increased during the course of the building or reno?