Builder's Risk Insurance Ontario

Builder’s Risk Insurance Ontario Builders and Contractors Can Count On  

While there was once a time when most people built their own homes as best they could, those days are long gone—modern buildings are incredibly complex and constructing or remodelling them is certainly not a project that amateurs can undertake. As a home builder, renovator, or specialized contractor, you provide an essential service, and your skill and experience are necessary to provide people with the homes and commercial properties of their dreams.  

However, as anyone in the construction industry knows, buildings under construction can be much more vulnerable to damage and destruction than a completed building. That means contractors and builders responsible for properties under construction are vulnerable to potentially major financial setbacks when something like a fire or natural disaster causes serious damage to a construction project that is underway.   

How do you protect yourself against that risk? The answer is to call Morison Insurance and speak with an experienced broker about builder’s risk insurance. Ontario contractors, builders, property owners and more can have the peace of mind that comes with knowing a project is protected by the right insurance coverage during the vulnerable period of time between when construction begins and is completed.  

What Is Builder’s Risk Insurance?  

Ontario builder’s risk insurance is a type of property insurance coverage that applies specifically to buildings under construction. It’s also referred to as “course of construction insurance” because it protects builders and others from paying out of pocket to restore parts of a building (or the entire building) following damage caused by an insured peril during the course of construction.  

For example, imagine framing work has begun for a new house when a severe storm whips through the building site and causes major damage to not only the framing that has already been done but also the materials that were on site but not yet used. If the construction company, builder or property owner has builder’s risk insurance in Ontario for the project, the insurance company will provide compensation to deal with the cost of replacing the damaged materials, as well as the expense of restoring or rebuilding the damaged framing.  

Who Should Have Builder’s Risk Insurance In Ontario?  

Anyone who could be considered legally responsible for all or a portion of a building under construction needs the protection of the right Ontario builder’s risk insurance policy. That responsibility often falls on the property owner, so it’s typically recommended that property owners invest in builder’s risk insurance.   

However, Ontario contractors and builders should be aware that many property owners expect and/or require coverage for builder’s risk insurance in Ontario. It’s important to clarify expectations for any building or construction project and make sure adequate coverage is in place during the planning phase of a construction or renovation project.  

The parties or professionals who may need Ontario builder’s risk insurance include:  

• Property owners  
• Real estate developers  
• Construction business  
• Home builders  
• General contractors  
• Renovation contractors  
• Contracting business  
• Tradespeople  
• Engineers  
• Project managers  

If you are responsible for the construction or building project, you will likely need to get builder’s risk insurance in Ontario. If you have questions about whether your project needs this coverage, you can discuss your project details with your trusted insurance broker for expert advice on builder’s risk coverage.  

What Types Of Perils Are Covered By Builder’s Risk Insurance In Ontario?  

When considering the types of risks or perils covered by builder’s risk insurance in Ontario, it’s important to understand that this type of insurance is typically an all-risk comprehensive policy. This means it covers all risks besides those specifically excluded in the policy.   

In practice, builder’s risk insurance in Ontario offers protection against financial losses for a wide range of risks to structures under construction and building materials that are on-site but have not yet been used. The exact perils covered will vary to some degree based on the insurance provider, and additional coverage can be added to the policy with an endorsement. Here are some of the basic perils that you can expect to be covered by an Ontario builder’s risk insurance policy.  

Fire and Natural Disasters  

When you think of natural disasters, you may be picturing the devastating effects of a tornado or tsunami, which are not necessarily all that common in Ontario. But it’s important to remember that even a big storm can potentially have a devastating effect on a building under construction, from high winds to large hailstones. If a major storm hits a construction project at exactly the wrong time, it could destroy all the progress that has been made so far, causing you to have to restart the project from square one if you don’t have adequate protection from Ontario builder’s risk insurance.  

Fire damage can sometimes result from an accident, and even a small accident, like carelessly discarding a lit cigarette, can have dire consequences, but fire can also happen in ways that are completely beyond anyone’s control. That includes lightning strikes, wind-blown flames from a fire on a neighbouring property and much more. Fires and natural disasters are a standard part of most types of property coverage, and builder’s risk insurance in Ontario is no exception to that rule.  

Accidents  

Many people, even seasoned professionals, are prone to assuming that they don’t need insurance coverage for accidental damage because they know what they’re doing and will exercise all due care and caution to avoid any accidents. Unfortunately, that’s not a realistic expectation for even the most experienced contractor or builder. In many cases, accidental damage doesn’t happen because someone was lazy or careless but simply because no one can do everything flawlessly 100% of the time, and some situations are unavoidable. With builder’s risk insurance, Ontario builders, contractors, and project leaders have insurance coverage for unforeseen accidents such as impacts from vehicles or heavy machinery, explosions, and more.  

Criminal Damage  

Building sites are more vulnerable to damage than completed buildings because, depending on the construction phase, the available options to completely secure the property against theft and criminal mischief can be very limited. Building sites in urban and suburban areas are particularly susceptible to theft and vandalism. If a construction project is vandalized or materials are stolen, builder’s risk insurance in Ontario provides coverage to repair the damage and replace missing items, helping you get the project back on track quickly.  

What Types Of Coverage Complement Builder’s Risk Insurance?  

Ontario builder’s risk insurance policies aren’t one-size-fits-all, so it’s always best to consult your insurance broker about the type of coverage you need. However, some coverages are highly recommended to complement builder’s risk insurance in Ontario.  

Tools and Equipment Insurance  

Proper tools and equipment are crucial for any worksite, especially in the construction industry. Whether it’s a common building tool such as a hammer, wrench or more specialized pieces of equipment such as a crane or compactor, if they go missing or are damaged during the course of the construction process, at best, you face minor work delays. At worst, the entire project will screech to a standstill as you scramble to find a replacement for an expensive piece of machinery.  

With tools and equipment insurance, or even equipment breakdown insurance, included in your policy for builder’s risk insurance in Ontario, you can ensure your project coverage is extended over your vital tools and construction equipment, allowing you to be financially compensated in the event of equipment breakdowns, vandalism, theft, or damage.  

Business Interruption Insurance  

Sometimes, unexpected events can cause a building project to come screeching to a halt through no fault of your own. Depending on how long your operations are paused, you may find yourself at risk of failing to meet contract deadlines or being unable to make money and still needing to pay ongoing expenses such as rental fees, inventory, or personnel salaries. This makes having business interruption insurance a vital part of your builder’s risk insurance in Ontario. It gives you the financial compensation you need to continue paying these expenses if an insured peril interrupts construction or otherwise stops work on the job site, allowing you to keep the project going until you can start to work again.  

Testing and Commissioning Coverage  

When construction projects start nearing completion, various systems will need to be tested, and sometimes, when they don’t operate as they should, they can damage the worksite, resulting in the need to redo work that was nearly completed. If they have this coverage as part of your builder’s risk insurance in Ontario, you can rest assured that any losses or damages that occur due to the testing phase are covered.  

What Is Not Included With Builder’s Risk Insurance In Ontario?  

Regarding builder’s risk insurance, Ontario brokers will advise you that this policy applies to under-construction projects and buildings undergoing major renovations only. Once the construction or renovation is complete, home insurance or commercial property insurance is necessary to receive insurance compensation for costs such as repair, restoration and replacement.  

Because Ontario builder’s risk insurance is a type of property coverage, it doesn’t offer liability protection. If third-party bodily injury or third-party property damage occurs on the building site and that leads to a lawsuit, for example, the litigation costs will not be covered by builder’s risk insurance—that would fall under commercial general liability insurance or potentially personal liability coverage instead.   (I would remove this paragraph as builders risk insurance can include premises liability coverage) 

Additionally, the builder’s risk insurance won’t cover any incidents or losses on the worksite that occur before and after construction starts. Ontario project owners will need additional coverage for materials, equipment, and property to ensure proper insurance protection in the case of any accidents or unforeseen events that occur during these times.  

There is a type of liability insurance called wrap-up liability coverage that is often confused with builder’s risk insurance because they both apply to situations involving buildings under construction, but they are two different types of insurance that require separate policies.  

Other types of damage that are not generally covered by builder’s risk insurance in Ontario include:  

• Bodily injury ( I would remove this from the list) 
• Damaged vehicles  
• Faulty workmanship  
• Contractual penalties  
• Government fines and fees  
• Mechanical breakdowns  

If you’re not certain what exactly is covered by your Ontario builder’s risk insurance policy, the best course of action is to call your qualified broker at Morison Insurance and consult with them to ensure you have all the types of coverage you need for adequate insurance on and off the building site.  

Is It Mandatory To Have Builder’s Risk Insurance In Ontario?  

Like most types of insurance coverage, it is not legally required by the provincial government to have builder’s risk insurance in Ontario—but that doesn’t mean other parties won’t require it. For example, property owners may require you to have an Ontario builder’s risk insurance policy in place before they sign a contract with you so they can ensure that there will be financial recourse available in the event of an insured peril such as a natural disaster or fire. If you cannot provide proof of insurance showing the requested coverage and coverage limits, the property owner or business owner may choose not to follow through with the contract, and the contract will ultimately go to a competitor instead.  

Even if no parties require builder’s risk insurance, it’s not a good idea to work on a construction or renovation project that is not properly insured. If you are the property owner and there’s no builder’s risk coverage, you may not be willing and able to cover the costs of starting from scratch in the event of a disaster, not to mention the expense of replacing all the damaged or destroyed building materials and soft costs such as re-surveying or re-permitting the project, which would bring the entire project to a halt and leave you to deal with costs such as property taxes and disaster clean-up for a property you can’t even use in the way you originally intended.  

If you are the building contractor, you may be responsible for covering those costs yourself, depending on the peril that occurred and your contractual obligations. But even if you’re not, if the property owner doesn’t have an Ontario builder’s risk insurance policy in place and can’t afford to pay the associated expenses, you could find yourself not only out of a job but also potentially find yourself with no recourse to get paid for the work you’ve already done that was destroyed.  

Can I Get Builder’s Risk Insurance In Ontario After Construction Has Begun On A Project?  

It’s critical to understand the importance of getting builder’s risk coverage in place before breaking ground on a new construction or renovation project. It is sometimes—but not always—possible to get builder’s risk insurance in Ontario for a project that has already begun, but it will be considerably more costly than if it was obtained before the start of construction or renovation.  

The greatest risk is when a project is nearing completion because that’s when almost all the building is constructed, and there’s far more in place that could potentially be destroyed, but premiums for Ontario builder’s risk insurance are determined starting from day one of the project.   

That’s why insurance companies may decline to offer builder’s risk insurance if a project is already underway. Ontario builder’s risk insurance providers willing to provide this coverage after the project starts the construction phase may charge much higher premiums than they would have if you had sought out coverage beforehand.  

How Much Does It Cost To Get Ontario Builder’s Risk Insurance?  

In Ontario, many different risk factors contribute to calculating the cost of insurance premiums. Until we know more about your project, we can’t provide an accurate quote for builder’s risk insurance in Ontario. Some common factors include:  

• Geographical location  
• Type of construction project  
• Value of the project  
• Historic insurance data  
• Your insurance claims’ history  
• Crime rate  
• Contractor experience  
• And much more!  

 Discuss your project details with our insurance brokers to receive an accurate builder’s risk insurance quote.  

Can The Types Of Materials Used For a Project Influence The Cost Of My Builder’s Risk Insurance?  

Ontario insurance providers consider many risk factors when calculating costs for builder’s risk Insurance in Ontario, and material choices are one of them.  

Ultimately, the type of materials you use for the project can impact the cost of your policy due to their safety and quality factors. Using fire-resistant items, such as masonry, will have lower risks than wood materials and may lower the builder’s risk insurance premiums. Ontario builders and contractors will also find that high-quality materials that can better withstand peril exposure may lower overall insurance costs for the project.  

However, remember that if your construction project requires specialized materials, the builder’s risk insurance cost will likely increase. Ontario insurance companies consider these items high-risk because if anything happens to them, they can be more difficult and costly to replace, which means these materials are riskier to insure.  

Remember to clearly communicate your project details to your insurance broker when discussing your need for builder’s risk insurance in Ontario to ensure you are properly covered in the face of a loss from an unexpected event.  

Where Can I Get Quotes For Builder’s Risk Insurance In Ontario?  

If you’re a property owner, contractor, or other party with interest in a building project, the first step is to call the knowledgeable insurance brokers at Morison Insurance and find out more about your options for the right builder’s risk insurance in Ontario. You can count on our insurance team for comprehensive coverage options, no matter their insurance needs.   

Give us a call today at 1-800-463-8074 and get the peace of mind that comes with knowing you have the right insurance coverage for builder’s risk insurance in Ontario.