Builders Risk Insurance or Course of Construction Insurance
Protect your property, equipment, materials and more during the course of construction.
Builders Risk insurance (also known as Course of Construction Insurance or COC insurance) is a type of commercial property insurance specifically designed to cover project owners during the course of construction. This includes some types of renovations or repairs.
There are additional risks and responsibilities inherent in construction work that a typical property policy is not designed to cover. For example, if someone steals contractors’ equipment from the job site or if construction materials are damaged, you could be liable for the loss if you do not have builder’s risk coverage.
Do I need Builders Risk Insurance?
Any construction or renovation project, regardless of its size, should have Course of Construction 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 construction 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
- construction materials
- building materials
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 Construction Insurance solution that’s right for you.
What types of Business Insurance do I need?
There are many types of contractors insurance policies that our experts can advise you on and package to meet your specific needs, such as:
- Commercial General Liability Coverage
- Commercial Property Insurance
- Business Interruption Insurance
- Pollution Liability Insurance
- Professional Liability Insurance
- Product Liability Insurance
- Equipment Breakdown Insurance
- Commercial Auto Insurance
- Property Damage Insurance
- Cyber Insurance