Course of construction / Builders risk insurance

October 29th, 2015

Building a new house or commercial property?

There are a number of things you need to consider when choosing which insurance package best fits your needs. Choosing the wrong option can leave you uninsured or paying too much for your project. We have years of experience insuring these types of risks and have many options available that will fit your needs and budget.

Two of the most common scenarios we see are contractors who build homes or commercial properties and homeowners who hire a general contractor to manage the construction of their home.

When you are a general contractor building a home or commercial property there are a few things to consider:

How much insurance do I need?

This is a common question we get asked and it is important to note that most course of construction policies have a 90-100% co insurance requirement. This means that the project has to be insured to 90-100% of the replacement cost. Failure to do so results in a penalty to the client in the event of a loss. Generally, we work off of a copy of the budget or else we determine the rebuilding value via a cost guide calculator.

How long will the project take?

Most course of construction policies are charged on a monthly basis. It is a good idea to try and pick a time frame that isn’t too long since you can always add extensions depending on which company you choose. Most course of construction policies require minimum 6 month term. If the project is finished before the last 30 days you can often apply for a refund.

Some companies offer a rebate of premium if you are claims free for the project and place your next construction project with the same carrier.

What kind of coverage do I need?

There are many options available and I have listed a few of the most common:

  • Broad form coverage for the building
  • Coverage for theft of buildings supplies
  • Sewer Back Up
  • Flood & Earthquake
  • Liability for premises, owners & contractors / wrap up
  • Vacant property coverage once the build is complete
  • Strata insurance

Having a custom home built by a general contractor or building it yourself?

Things to consider:

Only hire a general contractor who has insurance and obtain a copy or certificate of insurance.

If you are acting as your own contractor you need to get copies of insurance for all the sub trades you are hiring.

It may be more economical to insure the home as a homeowner’s policy with a dwelling under construction endorsement. An added benefit is once you are complete the building you can convert the course of construction into a comprehensive homeowners policy. You may also be eligible for the following discounts during construction: claims free, age, mortgage free & new home discounts.

Common coverage options include:

  • Broad form coverage on the building
  • Theft of building supplies
  • Broad water damage
  • Earthquake
  • Sewer back up

As part of the INSUREBC group with over 75 locations we have access to all the major markets. Contact sean@lyleinsurance.ca to find a product that fits your coverage needs and budget.