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November 3, 2022

Property Covered Under Builders Risk Insurance

A lot of things can go wrong, especially at construction sites. There are debris, holes, and broken stairs where you or your people could trip and fall.

Even if you exercise caution, gas leaks and malfunctioning equipment could lead to fires and other horrific accidents that hurt people and damage properties. How can you build without all these risks weighing in your mind?

What Is Covered Under Builders Risk Insurance

Builders risk insurance exists so you can have coverage against a myriad of potential risks.

Also called Course of Construction insurance, builder’s risk insurance is designed to protect owners, developers, architects, engineers, and general contractors from the devastating impacts of these types of accidents while the project is ongoing:

  • Fires; 
  • Acts of God such as floods, windstorm, hail, and rain;
  • Lightning;
  • Theft/burglary;
  • Explosion;
  • Collapse;
  • Vandalism, riots, and other malicious acts;
  • Subsidence; and
  • Impact by vehicles.

A firefighter tries to put out a large fire at a construction site

Property Covered Under Builders Risk Insurance

There is no standard template for a builders risk policy, which means coverage can vary greatly. However, the most common coverage for this type of insurance includes the following:

The Building Being Constructed

The structure that’s being constructed or renovated is usually covered by builders risk insurance. Aside from the property, the materials – whether stored off-site or in transit to the construction site – are also covered by this insurance.

Scaffolding, Fencing, and Temporary Structures

Direct physical loss or damage to scaffolding, construction forms, temporary fencing, and other temporary structures are also covered.

Tools and Equipment

Builder’s risk insurance coverage typically includes the tools and equipment that are: on-site, off-site but are involved in the project, or on their way to the site. They will be replaced or repaired if they are stolen or damaged by external factors.

Removal of Debris From Site

In the wake of damage caused by earthquakes or floods, builders risk insurance will also pay for pollutant cleanup and removal of site debris. It will also cover demolition expenses if needed to repair any structural damage. 

Construction workers planning the demolition of a damaged building

Extra Fees

Builders risk coverage might also include extra work fees for engineers and architects, and the expenses for additional site structures such as barricades. 

Soft Costs

If the damage causes a delay, builder’s risk insurance will also cover soft costs such as:

  • Premiums;
  • Legal fees;
  • Lost sales;
  • Rental income;
  • Real estate taxes; and
  • Additional interests on loans.

What Isn’t Covered by Builders Risk Insurance?

While many types of risks are covered by this policy, there are still exclusions. These typically are:

  • Documents and data such as blueprints and specifications;
  • Mechanical breakdown due to negligent operation;
  • Normal wear and tear;
  • Inherent vice
  • Work vehicles;
  • Loss due to faulty material, design, or workmanship; and
  • Employee theft.

If you want them to be included in your policy, you can add coverage through an extension.

How Much Does It Cost?

Every builders risk insurance policy is different, so costs vary depending on what you need. But generally, the price will depend on the following factors:

  • Type of project;
  • Value/size of the project;
  • Value of the construction materials;
  • Security measures;
  • Duration of the project;
  • Contractor loss history and specialization specifics; and 
  • Policy details such as coverage amounts and limits.

It’s a good idea to choose coverage limits that are equal to the anticipated construction expenses. The best way to find out how much your builders risk insurance would cost is to contact your broker and get a quote.

Get Comprehensive Builders Risk Coverage

When building or renovating a structure, don’t take risks! Protect your investment throughout the course of the project with the help of Contractors Insurance.

Contractors Insurance is a leading Toronto insurance brokerage firm that can customize an insurance program so you get comprehensive builders risk coverage at competitive rates.

To learn more, get in touch with us today! 


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