Builders Risk Insurance or COC Insurance

Do I need Builders Risk Insurance?

Any building or renovation project, regardless of its size, should have COC insurance (builder’s risk insurance coverage). Typically it is purchased by either the project owner or the contractor. In either case, all parties that have property involved in the project should be named in the policy. This may include the property owner, builder, contractor, subcontractors, the financial institution funding the project and, in some cases, the architects and engineers.

What does Builders Risk Insurance cover?

Builder’s Risk coverage protects property involved in a project against physical loss or damage due to causes such as fire, theft or vandalism. This coverage lasts for the duration of the project. Builder’s Risk insurance coverage can cover hard costs, soft costs and loss of income.

Hard costs that could be covered include:

• project structure
• tools
• equipment
• materials
• landscaping
• scaffolding

Soft costs that could be covered if incurred due to the above losses:

• interest (project financing costs)
• real estate taxes
• accounting and legal fees
• developer’s fees
• contractor’s general conditions
• permit / inspection fees
• consulting and marketing fees
• additional insurance costs

An example of how quickly expenses from soft costs can add up:
During a project to build a new apartment complex, in the event of a catastrophe, fire or flood, the architects and engineers may charge a fee to redraw changes to plans. Legal fees may continue as well during this time, and new permits may need to be pulled. The site may need to be resurveyed, and insurance costs will increase if the term needs to be extended as a result of delay from a loss. Additionally, the apartment complex may lose potential renters when construction is delayed from the loss.

Business Income Coverage

Business Income Coverage can be added to a builders risk policy through an endorsement. This coverage replaces lost revenue or profits that would have been earned by the policyholder had the project been completed on time. This can help protect the policyholder from financial losses in the event that the project is delayed or disrupted.

How much does Builders Risk Insurance cost?

Cost for builder’s risk insurance varies according to risk factors such as:

• project size
• project scope
• project location
• number of parties named in the policy
• whether the policy includes soft costs or loss of income

Contact CMB Insurance Brokers today to learn about the COC solution that’s right for you.