How Does Building Risk Insurance Work?


Being a property developer or contractor exposes you to a diversity of risks during the project’s construction phase. This entails perils like vandalism, theft, fire, or property damage due to adverse weather conditions.

Even if you are constructing a property yourself, it makes sense to have adequate building risk insurance in place.

It would be wise to have a backup strategy that can absorb any financial shock.

If you need traditional home insurance in Ontario, Surex can help you find the best quotes from the top-rated insurance providers in the province.

Constructing a property or working on an existing project is never free from threats. To secure the building or the raw materials from all sorts of damage, ensure to vouch for the right policy. Remember, hindrances in project development can eventually result in a delay in completing the same.

What is builder’s risk insurance?


A form of property insurance popular among builders, developers, and contractors, a builder’s risk insurance covers all the hazards during the construction phase of a building.

Whether you are renovating your property, constructing an extension, or working on a brand-new project, it makes sense to secure the security loopholes.

Let’s take an instance that would help you understand the matter lucidly. So, you are developing a new building for your client. You have already laid the structure out and have the tiling, steel, timber, and other construction materials around the site. A hurricane hits the city one fine day, and you find significant portions of the construction damaged.

Also, this can destroy your raw materials like steel, tiles, and lumber. Would you like to shell out thousands of dollars to compensate for the loss out of your pocket?

Building contractors need to address such situations with all risk building insurance policies.

So, you need not worry about storms, fires, or even vandalism that might potentially damage the building.

What does a builder’s risk insurance cover?


Typically, these policies cover the following:

• All sorts of repairs following an incident
• Replacement of destroyed, damaged, or missing building materials
• Removal of debris from the site
• Associated architectural expenses and legal fees

The coverage remains valid from the time you start working on a new project until its completion. Once a developer completes the project, the property owner’s building insurance will be in place.

Interestingly, building insurance on risk doesn’t work on a monthly or annual basis.

Instead, the developer needs to outline an estimated timeframe by which the project should be over. In case there’s a delay in construction or any extension is necessary, the contractor has to fork out additional premiums.

In most cases, builders need to get adequate coverage before the construction process commences. Once the project is underway, insurers generally do not cover them. However, certain insurance companies may be interested in providing coverage even after you start construction. This won’t help you save on premiums or get backdated claims covered. Talk to the experts at an online insurance brokerage to get the right insurance policy recommended.

Why should you get a builder’s risk insurance for your project?


Regardless of the project’s size and the contractor’s profile, it would be wise to have adequate builder’s risk insurance in place.

Every construction project tends to be unique. This explains why you need to work with reputed insurance experts to customize your policy. If necessary, you can also extend the benefits to cover temporary structures like scaffolding. These policies also come with provisions for related requirements like debris removal or pollution cleanup.

Be it weather elements like hurricanes, tornadoes, or lightning, or other perils like explosions, fires, vandalism, and theft, the building risk insurance would cover the damage.

Whether your raw materials are at the site or in transit, you can benefit from the coverage.

As a contractor or developer, you would cherish the mental peace with this coverage. While no contractor expects disruptions at the sites, you cannot prevent the inevitable.

What does building risk insurance not cover?


A building risk insurance policy wouldn’t cover problems caused due to faulty design, mechanical breakdowns, floods, or employee theft. Let’s take a look at the exclusions from the coverage.

Tools that you left at the site: In case you leave any tool or equipment at the site, it comes under contents insurance. Therefore, these won’t come under the ambit of your builder’s risk insurance if they sustain any damage.

• Mechanical issues: The construction industry involves lots of machines, both large and small. A builder’s risk insurance won’t cover malfunctioning machinery or equipment.

• Losses before or after construction: The timeframe matters a lot when it comes to builder’s risk insurance. You become eligible for the benefits from the moment the project commences. Therefore, if any raw material sustains damage before you start working on the construction process, it won’t be covered. Likewise, these policies don’t cover damages after you complete the construction.

• Faulty design: Under-construction projects often sustain damages due to faulty design. In these cases, the insurer would consider the loss to be an outcome of the builder’s error or negligence. These coverages are not included in the scope of the policy. You need to have professional liability insurance to get these expenses covered.

Who needs a builder’s risk insurance policy?


If you are a business or individual willing to construct a new home or carry out renovations, you should get a builder’s risk insurance policy. Real estate companies, builders, developers, business owners, homeowners, or general contractors might get these policies.

Regardless of your profile, you need adequate coverage when you build a new home or renovate an existing one. The flexibility of these policies makes them suitable for even individuals building homes.


The property developer or contractor bears the full responsibility of securing themselves financially before the project commences. With so many insurers to choose from, you might encounter difficulties narrowing down your options.

The insurance experts at the best online insurance brokerage can help you out of this dilemma, finding the most affordable quotes for comprehensive coverages. No wonder why established builders and contractors in Canada closely work with these insurance professionals.