Comprehensive Guide to Course of Construction Insurance Canada

If you're a contractor, developer, or property owner involved in a construction project in Canada, understanding Course of Construction Insurance (also known as Builder's Risk Insurance) is essential. This type of insurance provides coverage for buildings and structures while they are under construction, protecting against a variety of risks that can occur during the building process.

What is Course of Construction Insurance?

Course of Construction Insurance is a specialized type of property insurance that covers buildings, materials, and equipment during the construction phase. It protects against losses caused by events such as fire, theft, vandalism, windstorm, and other covered perils.

The coverage typically begins when construction materials arrive at the job site and continues until the project is completed or the building is occupied—whichever comes first.

Who Needs Course of Construction Insurance?

This type of insurance is typically required by:

General Contractors - Often required by project owners as a condition of the contract
Property Developers - Protecting their investment during the construction phase
Property Owners - Ensuring their new building is protected while being built
Subcontractors - May need coverage for their portion of work and materials

What Does Course of Construction Insurance Cover?

Standard Coverages

Building Under Construction - The structure itself as it's being built
Materials and Supplies - Building materials on-site or in transit
Temporary Structures - Scaffolding, forms, and temporary buildings
Foundations - Underground work and foundations
Soft Costs - Additional expenses due to a covered loss, such as architect fees, permits, and loan interest

Common Extensions

Equipment Breakdown - Coverage for construction equipment
Debris Removal - Costs to remove debris after a loss
Pollutant Cleanup - Expenses related to pollution cleanup
Professional Fees - Architect and engineer fees to redesign after a loss
Expediting Expenses - Extra costs to speed up repairs after a loss

What is Not Covered?

Course of Construction policies typically exclude:

Damage due to faulty workmanship or materials
Earthquake and flood (may be available as endorsements)
Normal wear and tear
Mechanical breakdown
Employee theft
Penalties for late completion

How Much Does Course of Construction Insurance Cost?

The cost of Course of Construction Insurance varies based on several factors:

Project Value - The total completed value of the project
Construction Type - Frame, masonry, fire-resistive, etc.
Location - Geographic location and local risks
Duration - Length of the construction project
Security - On-site security measures
Claims History - Previous insurance claims

Generally, premiums range from 1% to 5% of the total project value, though rates can vary significantly based on the factors above.

How to Obtain Course of Construction Insurance

Steps to Get Coverage

Gather Project Details - Including plans, specifications, and total project value
Contact an Insurance Broker - Work with a broker experienced in construction insurance
Provide Underwriting Information - Complete applications and provide requested documentation
Review and Compare Quotes - Evaluate coverage options and pricing
Bind Coverage - Select a policy and bind coverage before construction begins

Required Information

When applying for coverage, you'll typically need to provide:

Project plans and specifications
Total completed value
Construction start and completion dates
General contractor information
Subcontractor details
Site security measures

Tips for Managing Course of Construction Insurance

Start Early - Begin the insurance process well before construction starts
Review Coverage Regularly - Ensure coverage keeps pace with project progress
Document Everything - Keep detailed records of materials, progress, and any incidents
Understand Your Policy - Know what is and isn't covered
Report Claims Promptly - Notify your insurer immediately of any losses

Conclusion

Course of Construction Insurance is a critical component of any construction project in Canada. It protects all parties involved from significant financial losses that can occur during the construction process. Working with an experienced insurance broker can help ensure you have the right coverage in place for your specific project needs.

If you're starting a construction project and need Course of Construction Insurance, contact us today for a customized quote and expert guidance.