A builders’ risk insurance policy – also called course of construction insurance – is a specialized type of property insurance designed to protect contractors and property owners throughout any construction or renovation project.
It covers the cost of repairing an unfinished structure and replacing damaged building materials and equipment due to extreme weather, fire, water, theft, or vandalism.
From the first shovel in the ground to the final walkthrough, builders’ risk insurance is what keeps an unexpected incident from derailing a building or renovation project financially.
What Does Builders’ Risk Insurance Cover in Canada?
Get your policy in place before any work starts. Here’s what a standard builders’ risk policy covers:
Structures and materials:
- The building or structure under construction, renovation, or installation
- Materials and supplies at the job site
- Materials in transit or temporary storage before installation (coverage varies by policy, so confirm with your broker)
- Temporary structures like scaffolding, fencing, forms, and signage, if included in your policy
What the policy pays for if a major loss occurs:
- Replacing lost or damaged materials
- Debris removal and cleanup costs
- Repairing physical damage to the building or property
- Legal, architectural, and engineering expenses tied to the loss
What Doesn’t Builders’ Risk Insurance Cover?
Builders’ risk insurance is a property policy. It only covers damage to the structure and materials during construction. It does not cover:
- Contractual disputes between parties
- Faulty building design, project planning, or materials
- Equipment breakdowns
- Third-party bodily injuries or property damage (you need general liability insurance for this)
- Professional negligence claims
- Government actions
- Earthquakes and overland flooding
Most of these gaps can be filled with separate policies. Talk to a licensed broker about what other coverage your project needs.
Hard Costs vs Soft Costs: What’s the Difference?
This is where many contractors get caught off guard.
Hard costs – sometimes called brick-and-mortar costs – are the direct expenses of building: raw materials, labour, equipment, fixtures, and landscaping.
Soft costs are indirect expenses, including permits, insurance premiums, interest on loans, site surveys, property taxes, and engineering or inspection fees.
Standard builders’ risk policies automatically cover hard costs. Soft costs are typically not included. You’ll need a “soft cost endorsement” added to your policy to protect them.
If your project has significant soft cost exposure (and most do), make sure your broker knows. It’s an easy add-on that’s often overlooked.
Who Needs Builders’ Risk Insurance?
Anyone with financial exposure to a construction or renovation project should have it. That includes:
- Property owners and real estate developers
- Project engineers and project managers
- Lenders and financial institutions (many require it before funding a project)
Typically, either the property owner or the general contractor purchases the policy. A contractor can buy it on behalf of the owner and roll the cost into the project budget, but both parties should agree on this before construction starts to avoid gaps in coverage.
How Much Does Builders’ Risk Insurance Cost in Canada?
Builders’ risk insurance policy premiums vary significantly based on the scope of a project.
Factors that affect your rate include:
- Project location (province, urban vs. rural, local risk factors)
- Type of work (new build vs. renovation, residential vs. commercial)
- Total project cost, including both hard and soft costs
- Completed value of the building
- Your insurance claims history
Your actual quote depends on the specifics above. The fastest way to know what you’ll pay is to get a free quote.
Frequently Asked Questions About Builders’ Risk Insurance in Canada
When should I get builders’ risk insurance?
Before any work begins, and ideally before the contract is signed. The policy should stay active until the project is substantially complete and handed over. Don’t wait until construction starts; coverage gaps at the beginning of a project are a common and costly mistake.
Does builders’ risk insurance cover liability during construction?
No. Builders’ risk insurance covers physical damage to a building and its materials. For third-party injury or property damage claims, you need a separate general liability insurance policy.
What is a blanket builders’ risk insurance policy?
A blanket builders’ risk policy covers all of a contractor’s projects over a 12-month period under a single policy, rather than insuring each project individually. For contractors running multiple projects a year, it’s often more cost-effective and easier to manage than buying individual policies each time.
Is builders’ risk insurance legally required in Canada?
Generally, no, but it’s almost always contractually required. Lenders, financial institutions, development companies, and some municipalities may require proof of builders’ risk coverage before a project can get off the ground. Check your contract and financing terms before assuming you don’t need it.
What’s the difference between builders’ risk insurance and general liability insurance?
Builders’ risk covers damage to a building project (the structure, materials, and equipment). General liability insurance covers third-party bodily injury or property damage claims.
Get a Free Builders’ Risk Insurance Quote in Under 5 Minutes
One unexpected incident – a fire, storm, theft – can blow your budget and your timeline. Builders’ risk insurance makes sure it doesn’t blow your whole project.
Fill out our online application for a free builders’ risk insurance quote in under five minutes.
Our licensed brokers work with more than 50 insurance providers across Canada to find the right policy for your project, your budget, and your timeline. We’ll advise you on the right coverage limits, and issue your policy documents and certificate of insurance within 48 hours.
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