Welcome to our guide to builder’s risk insurance in Ontario, where we delve into the key definitions, cost breakdowns, claim examples, and necessities of builder’s risk insurance. Whether you’re a newbie to the construction industry or a seasoned contractor with numerous successful projects under your belt, understanding what builder’s risk insurance can do for your construction business is crucial to ensuring the safety of your projects. Builder’s risk insurance helps you to protect against unforeseen risks by ensuring the financial stability of your business through the mitigation of potential losses that could occur during the construction process.
Whether your builds are residential or commercial developments, Ontario contractors need to keep in mind the specific considerations that come with seeking out builder’s risk insurance. This guide should give you some practical insights into what builder’s risk insurance encompasses, what it costs, what it covers, and why you may need it.
What is Builder’s Risk Insurance in Ontario?
Builder’s risk insurance is what it sounds like – insurance to protect against the risk that builders may experience during construction. Another name it goes by, course of construction insurance, indicates to the fact that builder’s risk insurance is specifically designed to cover a project only during construction, and is not an ongoing, all-inclusive policy that protects all aspects of your business. It should be viewed as what it is: a strong addition to an existing contractor or construction business insurance policy designed for your business’ unique needs.
What does builder’s risk insurance in Ontario cost?
You’ll find builder’s risk insurance, on average, will cost between 1%-4% of the total project cost. As an example, an estimate for a project costing $50,000 may cost between $500 to $2,000 to insure with builder’s risk. Further variation comes down to the complexity of the project, length, who hired the contractor, and so forth.
What Does Builder’s Risk Insurance Cover?
Policies for builder’s risk insurance vary, but here’s a list of some of the most standard policy inclusions:
- Construction Delays – Any additional coverage expenses incurred due to project delays may be covered by a builder’s risk insurance policy.
- Materials and Equipment – If any materials or equipment are damaged due to an insured peril either on the project site or being transported to, their replacement/repair costs may be covered by your builder’s risk insurance.
- Property Damage – If any property under construction is damaged during construction, your builder’s risk insurance may cover the cost to repair or replace the lost property.
- Soft Costs – If a covered peril occurs, your builder’s risk may cover “soft costs” – i.e., architecture fees, permits, engineering fees, and so on.
- Debris Removal – If an insured loss occurs, builder’s risk insurance may cover the cost to remove and dispose of the debris that resulted. This also includes clearing the site and hauling costs.
- Faulty Workmanship – Some policies may offer coverage for any damages that could result from design errors, defective materials, or otherwise “faulty workmanship.” This offers protection in the event of construction defects, resulting in property damage.
Note that like with any policy, exact specifications will vary from insurer to insurer. We recommend every policyholder review their coverage and consult with an insurance broker to fully understand the details of what is covered and to what end.
Claim Example Scenarios for Builder’s Risk Insurance
What does builder’s risk insurance in Ontario cover exactly? Policies may vary, but ultimately the following scenarios are instances you might expect to be covered by builder’s risk insurance:
Claim Example A: Fire Damage
Imagine you’re in the midst of constructing a multi-story commercial building when a devastating fire breaks out on the construction site. The flames quickly spread, causing extensive damage to the partially completed structure, materials, and equipment. With Builder’s Risk Insurance, you can file a claim to cover the costs of repairing or rebuilding the damaged portions, replacing the charred materials, and restoring any lost progress.
Claim Example B: Theft and Vandalism
You’ve been diligently working on a residential development project, but during the overnight hours, thieves break into the site. They steal valuable construction equipment, tools, and supplies, leaving you with a significant financial setback and project delays. Fortunately, with Builder’s Risk Insurance, you can make a claim to recoup the financial losses caused by theft and vandalism, allowing you to replace the stolen items and resume construction promptly.
Claim Example C: Weather Damage
Mother Nature can wreak havoc on construction projects. Let’s say you’re building a new office complex, and a powerful windstorm sweeps through the area, causing severe damage to the building’s framework, roof, and exterior. Rainwater pours in, saturating the interior and ruining installed fixtures and finishes. Thanks to Builder’s Risk Insurance, you can file a claim to cover the costs of repairs, replacement of damaged materials, and restoration of the affected areas, ensuring that the project can continue smoothly despite the weather setback.
Vago Insures Builders with Appropriate Builder’s Risk Insurance
Vago, an innovative MGA centered in the Montreal area and province of Quebec, is happy to safeguard your construction project from start to finish. Our array of coverage options are specifically tailored to providing financial protection against a broad range of potential risks, including vandalism and theft to loss of income or property damage. When you need an expert touch, our team of experienced underwriters never fail to deliver.
We will work with you to create a custom-made policy that satisfies your project’s unique needs, so you can work and deliver on your client’s expectations with confidence.
