Any construction project starts with an idea. They come in all shapes, sizes, and complexity levels. There’s one thing that is constant among all construction projects – they all come with risks. Risk of physical loss to the property being built / renovated is a major concern. Safety and experience is a great way to mitigate risk; however, we can also reduce the potential for a significant loss through insurance. In the following article, we’ll outline the basics of property insurance for construction risks, Builders Risk Insurance, also commonly called Course of Construction Coverage.
What is Builders Risk / Course of Construction Insurance?
Builders Risk Insurance, which is also commonly referred to as Course of Construction Insurance or a COC, is an insurance policy that covers the physical property comprising a construction project. Building materials, partially completed structures, and other property that is used to complete a construction project can add up in value and it is important to have a policy in place that will cover the potential for loss.
This kind of coverage is relevant to both builders and home owners – whomever has insurable interest in the property being constructed. COC insurance can also include coverage for property in transit, at other locations, and even soft costs such as permits. The provided application when you seek a quote on our Course of Construction Insurance page will walk you through the process of identifying the coverage applicable to your project.
Types of Construction Projects that need Builders Risk Insurance
COC or Builders Risk coverage is applicable to all kinds of construction projects. Here is a list of some types of projects and contracts that would benefit from or potentially even legally require a COC policy:
- Residential New Builds
- Residential Renovations
- Custom Homes
- Commercial New Builds
- Commercial Renovations
- Tenants Improvement Projects
- Civil & Municipal Contracts
- Road Building
- Bridge Building
- Pipelines & Utilities
- and more
Protect just about any construction project with adequate property coverage. If you’d like to speak with an insurance professional about your specific construction works, don’t hesitate to contact us.
Understanding how COC Quotes are provided
The pricing of your Course of Construction Insurance policy will depend on various aspects of the project in question. Risk mitigation and the prevention of a major loss is important for any business or homeowner. The cost will be determined by numerous factors including, but not limited to the following:
- Value of the construction
- Value of any structures & materials involved
- Specified coverage and limits required
- Duration of the project
- Experience of the contractor(s) performing work
- Loss history
- Geotech Reports & compliance
- and more
We take your application information once and shop it to various insurance markets, that way you know you’re getting great coverage at a competitive price for your Builders Risk Insurance.
Coverage Items to watch for on your Builders Risk Policy
When looking at a COC quote, there are definitely some specific coverages that you want to ensure are adequate before binding your policy (“binding” is the fancy insurance term for placing or purchasing). The first thing that you should look for is the term “All Risks” when referring to the property portion of your COC policy. “All Risks” is the broadest form of coverage and will ensure that your project is financially protected from losses arising as a result of fire, flood, theft, and more.
You can also specify hard costs vs. soft costs on your COC application. If you are purchasing a Builders Risk policy due to contractual obligations on a municipal project, this should be explicitly stated to your insurance representative. It is best practice to also provide any contract documentation to your broker so that any details can be reviewed. Property or materials while in transit or at another location could be an exposure that you want included on your insurance, so always check contract documents carefully.
A type of coverage that we haven’t discussed yet is liability. There are a few ways this can be managed on a construction site. Each business operating on the site should have their own Commercial General Liability (CGL) coverage in place. This should be verified by the general contract, and / or owner. In addition to this and for added insurance protection, a Wrap-Up Liability policy can be purchased which is like an umbrella policy covering the liability of all contractors and subs involved in the build or renovation.
Policy Warranties and Exclusions to be aware of
When reviewing your Builders Risk quote, there will often be specified warranties and exclusions that will outline important points regarding your policy that may not be expressly outlined. It is important that you are aware of any warranties and major exclusions so that you proceed with your construction project in a manner that will result in an approved claim should the unthinkable occur.
A warranty is a condition that must be met in order for coverage to be valid. Depending on your construction pursuits, warranties can vary from project to project. For example, it may be a warranty that a construction site be fenced for the duration of a project in order for an insurer to provide coverage. Another common warranty on commercial construction project policies is a watchman requirement. Again, any important warranties are listed on your quote so it’s important to follow these should you need to make a claim.
Exclusions are also important to be aware of when binding any insurance policy. Make sure that any of the exclusions that will be listed on your quote and policy documents are not expected to be covered so that you can take adequate risk management measures to prevent uninsured losses. We only use reliable insurers with proven track records and claims payout histories, but knowing your specific policy exclusions are still an absolute must.
Please Note: If you’re a general contractor that hires subs to perform work, you must ensure that all of your subcontractors have adequate liability insurance in place in order for coverage to be applicable, and to protect your own liability.
Proceed with your Construction Project with Confidence!
Insurance isn’t all about doom and gloom, it’s about risk management and proceeding with your construction project with confidence! You can rest easy knowing you and your project are protected from the potential of loss which could be difficult to recover from. Visit our COC Insurance page today to learn more and start your application project. We’ll ensure you get the coverage you need at a great price. Happy building!