It’s been said a country’s prosperity can be measured by the size of its construction industry. After all, the construction industry builds and maintains the infrastructure of our cities and communities – from the homes we live in and our energy grid to the transportation networks and roads we use.

On that score, the Canadian construction industry is estimated to be worth around $141 billion to our economy, accounting for 7.5% of Canada’s gross domestic product. Meanwhile, recent data from Statistics Canada shows investment in building construction had a record year, jumping 19.3% to more than $218 billion in 2021.

As you might expect, there are many risks associated with being in the construction industry, which puts the onus on contractors and small business construction industry owners to ensure they’re not exposed to the financial impacts of an accident, incident, or lawsuit. That’s where builder’s risk insurance comes into play. Also known as course of construction insurance, a builder’s risk policy is a form of property insurance designed to protect contractors and homeowners from the beginning to the end of any construction project.

A construction worker

As winter fades and the construction season heats up, now’s the time for construction professionals to take stock of what jobs they will be working on this year and ensure they have the right amount of insurance to cover them if something goes wrong. Here are four reasons why every contractor or builder should have builder’s risk insurance and why it’s beneficial:

1. Coverage for Things Out of Your Control

Builder’s risk insurance covers the costs of repairing an unfinished structure and replacing building materials and equipment from physical loss or damage. For example, if severe weather like hail, lightning, or high winds, fire, vandalism, or theft affects the construction site where you’re working. It also typically includes coverage for vehicle- and aircraft-related damage. Take the time to determine the risks you face as a contractor and do regular assessments of your business to ensure you’re adequately protected.

2. You Select the Coverage Limits

Like any business insurance policy, you can choose the coverage limits and deductibles for your builder’s risk policy. As a rule, your coverage should reflect the value of the project you’re building. Turn to what the budget is for the project at hand as a guide to determine your policy’s coverage limit. Additionally, by choosing a higher deductible, you can reduce the cost of the policy’s annual premium. But if you go that route, be sure you have the necessary funds to pay a deductible if you must file a claim for damages.

3. It’s Affordable

A builder’s risk insurance policy is affordable, and in some cases, you can transfer the cost of the policy to the property owner. More importantly, a typical policy costs significantly less than paying for clean-up costs at a damaged worksite following a major storm or fire out-of-pocket or if your materials or equipment are stolen or vandalized. Why pay the fine for someone else’s crime? Moreover, a builder’s risk policy may cover any demolition expenses or the cost to clean up debris at the site following a fire or damages caused by severe weather.

4. It’s Unique

Understand that a general liability or commercial property insurance policy will not cover damages or losses during a construction project. That’s what makes builder’s risk insurance unique. Furthermore, you can include additional coverage for “soft costs” to the policy to cover costs incurred from a delay that, for instance, results in having to extend any equipment rentals you require.

Protect Your Paycheque: Get Builder’s Risk Insurance

Ultimately, it’s crucial to recognize the necessity of a builder’s risk policy. One bad storm or fire can set your project back by months and prove financially detrimental to you without a builder’s risk policy. Since builder’s risk insurance is generally considered an “all-risk” policy, most incidents are covered unless excluded.

Although it’s best to have a builder’s risk policy in place before starting a construction project, you can get one from Zensurance after construction has begun. Any general contractor or property developer is responsible for buying a builder’s risk policy and ensuring any subcontractors hired are added as named or additional insureds on it.

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