Halfway through construction, a building is a strange legal object: too built to be nothing, too unfinished to be anyone's insured premises. The owner's future property policy hasn't started; the contractor's liability policy covers injuries and damage to others, not the works themselves. If fire takes a half-framed structure in the night, the question 'whose insurance?' has exactly one good answer — and it's a policy many projects buy late, or wrong.
Builder's risk — course of construction insurance — covers the project itself while it's being built: the structure, the materials, and increasingly the soft costs a delay generates. As construction season opens, here's how it works and where it goes wrong.
What's covered: the works, wherever they are
A builder's risk policy insures the value of the work in progress against fire, theft, vandalism, wind, and water perils — not just on site, but typically materials in transit and in temporary storage too, which matters when a project's windows are sitting in a yard three weeks before install. Theft deserves emphasis: copper, tools, lumber, and appliances walk off unsecured sites constantly, and site-security conditions in the policy (fencing, lighting, lockup) are enforceable expectations, not suggestions.
Soft-cost extensions are the sophisticated buyer's difference-maker: after a covered loss, the project doesn't just need re-framing — it needs extended financing interest, extended permits, re-mobilization, sometimes redesign. Those costs are real, insurable, and skipped by default on cheap placements.
Who buys it — and why the contract decides
Either the owner or the contractor can buy builder's risk; the construction contract assigns it, and everyone with an insurable interest — owner, GC, subs, lender — should be named or covered as required. Problems arise when the contract says one thing and the placement says another, or when both parties assume the other bought it. The lender usually forces the issue on financed projects; on private renovations, nobody does, which is exactly where the gaps live.
For contractors, one more layer: your CGL excludes damage to your own work product in most respects. Builder's risk is what protects the thing you're building; liability protects everything around it. A construction program needs both, doing different jobs.
The renovation trap
The most common builder's risk failure isn't on new builds — it's renovations. A homeowner or building owner starts a major renovation without telling their property insurer; the existing policy has vacancy or renovation conditions that quietly impair coverage; and the project itself is insured by nobody. Major renovations need two things: renovation builder's risk on the works, and a conversation with the existing property insurer so the base policy stays intact.
Contractors can protect themselves and their clients by making proof of both part of project onboarding. It's a professionalism signal that also prevents the worst client conversation in the trade: explaining after the fire why nobody's policy responds.
Timing: the two ends of the policy
Builder's risk should start before materials arrive — ground-break at the latest — and it ends at completion, occupancy, or expiry, whichever the wording hits first. Both ends bite. Starting late leaves early site deliveries bare; more subtly, occupancy clauses can terminate coverage when a project is partially occupied before final completion, a routine event in phased commercial work. And the handover to permanent property insurance must be seamless: the most dangerous week to be uninsured is the week everyone thinks the other policy has started.
Repeat builders should ask about annual reporting forms — one policy covering all projects as declared — which beats project-by-project purchasing on both cost and the odds of forgetting one.
What builder's risk costs, and the variables that drive it
Builder's risk pricing is quoted as a rate against the completed project value, and for ordinary Ontario construction it's more accessible than owners expect — frame residential builds and standard commercial fit-outs commonly rate in the fractions-of-a-percent range for the project term, with the dollar figure scaling with value and duration. A $500,000 renovation might see a premium in the low four figures; a $5 million ground-up build prices with more underwriting attention but the same logic.
The rating variables are concrete: construction type (wood frame versus non-combustible — fire is the peril, and framing lumber burns), project duration, protection (site fencing, lighting, cameras, distance to hydrants), water exposure once the building envelope closes, and hot-work practices where torches and welding appear. Renovation projects add the existing-structure question: insuring the works alone versus works-plus-existing-building produces very different numbers, and the contract should say which is intended.
Two cost behaviours to plan around: extensions cost money — projects that blow past their policy term need endorsed extensions, and chronic extensions reprice — and claims-free project history compounds, because repeat builders with clean records graduate to better annual-form terms. Build the insurance timeline into the project schedule the way you build inspections in, and both behaviours stay friendly.
Theft and vandalism: the frequency claims of every site
Fire is builder's risk severity; theft is its frequency. Copper, tools, appliances staged for install, lumber packages in a market where lumber prices spike — construction sites are shopping lists with fencing, and the claims arrive Monday mornings. Policies respond, but with conditions worth taking literally: site security warranties (fencing, locked storage, sometimes cameras or lighting) are enforceable expectations, and materials 'stored in the open without protection' language appears in more wordings than contractors read.
The prevention economics are straightforward because thieves are: lit sites with cameras and locked sea-cans lose dramatically less, delivery timing that avoids weekend staging removes the richest targets, and appliance/fixture deliveries scheduled days before install rather than weeks eliminate the classic loss. GPS trackers hidden in high-value equipment have turned write-offs into recoveries often enough that heavy-equipment insurers now credit them.
Document the site's protection at mobilization — photos of the fencing, the signage, the storage — and you've simultaneously satisfied the warranty conversation and built the claim file you hope never to need. It's five minutes with a phone on day one, standard practice for the builders whose renewals we enjoy marketing.
A claim story: the week before drywall
Composite, from the pattern every adjuster knows: a custom home build, envelope closed, mechanical roughed in, drywall scheduled Monday. Friday night a supply line fitting — pressurized that week for testing — lets go on the second floor. No occupants, no alarms, no walk-through until Monday's crew arrives to two flooded storeys, saturated framing, and a schedule in ruins. The builder's risk policy responds: extraction and drying, replacement of damaged rough-ins, and — because the builder had bought the soft-costs extension — the extended financing interest and re-mobilization costs of a nine-week delay.
The instructive details: the policy's water coverage applied because testing was declared and conducted per spec (undocumented pressure-testing shortcuts are a recurring denial story in this exact scenario); the soft-costs extension, bought for a few hundred dollars, returned five figures; and the weekend-discovery gap — the difference between a bad claim and a catastrophic one — prompted the builder to adopt cheap wifi water sensors on all subsequent closed-envelope projects. Their next insurer application had a question about exactly that; the yes lowered the rate.
One project, one fitting, and the entire builder's-risk value proposition in a weekend: the structure had no other policy anywhere that would have paid a dollar of it.
Wrap-ups, subs, and who insures what on larger jobs
As projects scale, the insurance architecture formalizes. Larger jobs increasingly use wrap-up liability programs — one CGL structure covering owner, GC, and all subs for the project — which streamlines certificates and closes the gaps between forty separate policies. Builder's risk sits alongside as the property leg, and the contract documents (CCDC forms in much of Canadian construction) allocate both explicitly. Read those insurance schedules; they're the governing law of who buys what, and bidding without pricing your allocated share is bidding blind.
For subs, the practical questions are two: does the project's builder's risk or wrap-up cover your work and materials (usually yes, as an insured or via waiver structures), and what does the contract still require you to carry yourself (your own CGL, tools, auto — always). For GCs, the mirror obligations: collecting sub certificates remains mandatory even under wraps, because subs' own operations off-site and their tools stay their responsibility.
The unifying advice for the season: bring the contract's insurance schedule to your broker with the bid documents, not after award. Pricing the insurance into the bid is a same-day exercise; discovering an uninsurable allocation after signing is a project problem no policy fixes. Construction placements are daily work for us — the schedule review comes free with the coffee.
The bottom line
Every project has a moment where its value exists only as work-in-progress — and that value needs its own policy, matched to the contract, started on time, ended deliberately. Send us the project details and contract insurance clause together, and builder's risk placement is typically same-week. Building all season? Ask about annual forms before the next ground-break.