What Insurance to Get Before Breaking Ground on Your Building’s Construction

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Building Construction Insurance BC

Are you about to break ground on a new building, or an adjacent extension to an existing facility? As the property owner you’ve got a lot on your mind with respect to budget, contractors, laborers, machinery, materials, stakeholders, and timeline to completion. All of it is connected to a more pressing concern – liability risk. And when it comes to liability risk, there is nary a more vulnerable undertaking than building construction. To put your mind at ease so that you can focus on action items related to completing your building project on time and within budget, we have provided clear direction to mitigating liability (and loss). Let’s review!

What Type of Insurance You Need to Secure to Reduce Loss and Liability Connected to New Building Construction

Builders’ Risk / Course of Construction Insurance

Everyone knows that a commercial, industrial, or residential building needs to have adequate insurance to protect against threats to the property along with the assets and people within. But before a blueprint becomes a tangible reality, you need to secure Builders’ Risk insurance to cover losses and liabilities that may occur during the course of construction. More importantly, you need to secure this coverage before construction begins because a lot can happen from the moment the procurement phase concludes.

For instance, vandalism, theft, and a variety of on-site accidents may ensue as soon as equipment, machinery, and materials are brought in to excavate the lot to prepare the foundation. Weather events may also wreak havoc before cement is poured and a nail is hammered. These very same threats persist throughout the entire process, and inflate as permanent fixtures, appliances, and other assets are introduced into the project. Generally, Builders Risk / Course of Construction Insurance will cover you for most incidents. But not all – keep reading.

Building Projects That Require Builders’ Risk Insurance

What sort of building project requires this coverage? You want to secure Builders’ Risk insurance for any of the following:

  • New residential construction (single-family and multi-family developments)
  • New commercial building construction
  • New industrial building construction
  • New agricultural building construction
  • Construction that adds a second (etc.) story or adjacent addition to a property
  • Major renovation projects (contact a broker for clarity on this)

Considering this extensive list, Builders’ Risk insurance is typically obtained by homeowners (for self-builds), business owners, real estate developers, and any other person or organization that owns the property. That said, it may also be obtained by general contractors, renovation contractors, and construction companies. The responsibility for who obtains this policy must be clearly stipulated. No assumptions should be made and no ground shall be broken on the project until it is known.

Obtain Additional Coverage to Protect Against Other Threats

The insurance policy discussed above should most certainly be considered essential. But as equally alluded to – it’s not enough. Builders’ Risk insurance does not cover loss or damages to the insured property when sustained by a number of perils, including (but not exclusive to) the following:

  • Water damage caused by flooding
  • Earthquakes
  • Mechanical breakdowns and failures
  • Contractual penalties
  • Faulty or defective design, planning, and materials
  • Other (contact a broker for clarity on this)

For greater clarity on these coverage limitations, and which endorsements or policies can be purchased to hedge most other risks, please schedule a consultation with a broker at Park Insurance today.


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