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An ongoing construction site that is protected by builder’s risk insurance


June 16, 2022

How Builder’s Risk Insurance Improves Your Reputation

Also known as “course of construction insurance,” builder’s risk insurance is vital for comprehensively protecting projects like renovation and construction. This is because when projects like these are ongoing, there is no way to predict when damage, theft, or vandalism will cause unexpected delays and expenses. 

Builder’s risk insurance covers the following:

  • Damage to the structure
  • Theft of materials and tools
  • Vandalism of materials and tools 
  • And more

Builder’s risk insurance protects the project itself—which is why project owners, investors, and clients look favourably upon businesses that take the initiative to have this type of insurance. 

If you would like to learn more about builder’s risk insurance, this guide touches on what this insurance type covers and how having this type of insurance positively impacts your business’s reputation.

Let’s get started!

Silhouette of an ongoing construction and workers on scaffolding

The Targeted and Broad Coverage of Builder’s Risk Insurance  

A builder’s risk policy is targeted because it satisfies a need that exists only in the construction industry (and related trades)—which is the need to protect structures under construction or renovation. It is also considered one of the broadest policies available because it protects all of the following: 

1. The Structure Under Construction & Its Materials

Builder’s risk insurance allows you to protect the structure and the materials that are not yet securely installed. This type of insurance gives payouts if you sustain damage or loss from the following: 

  • Earthquakes, hurricanes, lightning
  • Fires and explosions
  • Theft/vandalism by criminal elements 

2. Temporary Structures and Scaffoldings

Temporary structures are at a higher risk of theft or vandalism damage because they come apart easily. They are also more prone to damage from weather anomalies, earthquakes, and so on. The right builder’s risk insurance plan will give protection for all of these. 

3. The Tools/Equipment

Though builder’s risk policies will not cover wear and tear, various other sources of damage or loss involving tools are included in the policy. Considering that construction equipment theft costs the industry millions each year, insuring tools and equipment is a must. 

4. Demolition and Clean-up Costs

A badly damaged structure under construction may require demolition, clean-up, and redoing of the damaged areas. These costs are covered by builders’ risk insurance policies.

5. Soft Costs Associated with Project Delays

Soft costs associated with project delays will also be shouldered by builder’s risk insurance. Loss of rental income, lost sales, etc., are all examples of soft costs.

The Positive Effects of Builder’s Risk Insurance on Your Reputation 

1. It Shows You are Insurance-Savvy

In the interest of public safety and to protect customers/clients, contractors in Ontario are required to have CGL insurance. This can be considered the bare minimum when it comes to contractor insurance. Unlike builder’s risk insurance, CGL insurance alone isn’t meant to set your business apart from the rest. 

Taking the time to set up other insurance types that your business needs will give the impression that you are an insurance-savvy owner who makes sure that all bases are covered. This encourages clients and project owners to trust you more and prefer you over the competition.  

2. It Shows That You Don’t Take Project Risks Lightly

Whether it’s small-scale home renovations or larger-scale commercial constructions, project owners and clients are investing a sizable amount in these projects. To a homeowner, the project may be costing them a large fraction of their savings. To a project owner of a large-scale endeavour, large sums of money and investors’ expectations are all on the line.

This is why trust is such a major differentiator. Nobody will trust a contractor that takes risks lightly. By getting an insurance plan that directly protects the project itself, you are showing that you are aware of the risks and that you’re taking measures to manage them.   

Close up of a hand protecting a stack of coins from falling dominos to symbolize risk management

3. It Shows That You Take Initiative

Whether you already have a builder’s risk insurance master policy or are planning to propose the idea of getting one to a client or project owner, it makes a big difference in terms of how your business will be seen. 

Your client may or may not know about builder’s risk insurance or what its benefits are. But if you already have it set up or you discuss setting it up (and why), it shows a strong initiative and commitment to the project’s success.   

4. Clients and Project Owners Will Feel Safer Working With You

This is what having builder’s risk insurance is like: 

  • In case of building damage, the cost of demolition, clean-up, and rebuilding is covered.
  • In case the project gets delayed, consequent soft costs are covered.
  • In case of tool/equipment/scaffolding theft, the project can swiftly continue because replacements will be covered. 

All things considered, talk to any client or project owner about builder’s risk insurance, cite these above examples, and they will feel much safer working with you. 

Do I Need a Builder’s Risk Policy If I Already Have Contractors Insurance? 

Contractors insurance is a broad term that can mean a basic CGL policy or an insurance bundle for contractors. If you only have a CGL policy or if your bundle does not include builder’s risk insurance (aka course of construction insurance), then you don’t have a policy that directly protects your projects from damage, theft, etc. For that, you would still need to set up builder’s risk insurance.   

Who Pays for Builder’s Risk Insurance? 

In many cases, the person responsible for setting up a builder’s risk policy is the general contractor. However, the person/entity who ends up paying for this type of insurance depends on the agreement between the general contractor and the project owner. 

Get Builder’s Risk Insurance That You Can Fully Count On 

Contractors Insurance is an award-winning, Ontario-based insurance brokerage firm that provides tailor-fit insurance plans for contractors and tradespeople. If you need builder’s risk insurance for a project or a master policy for a set of projects, we’re here to help! Our dedicated team can put together an insurance plan that fits your needs perfectly. 

Ready to get a reliable builder’s risk insurance plan that will win the trust of more clients? Contact us today!


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