What does builder's risk insurance cover?

Builder's risk covers a project while it is under construction or renovation: the work itself, materials on site, in transit and in storage, and temporary works such as scaffolding and formwork. It responds to insured damage such as fire, theft, vandalism and windstorm, and can be extended to pay soft costs, lost income from a delayed opening and damage during equipment testing.

Who should buy builder's risk, the owner or the contractor?

The construction contract decides. Under CCDC 41 the contractor arranges broad form property insurance for the project. On other projects the owner insures it and the contractor relies on that policy. Either way, the owner, contractor, subcontractors and lender should all be insured on the policy, with subrogation waived between them.

How much builder's risk insurance does CCDC 41 require?

The 2020 edition of CCDC 41 requires broad form property insurance of at least 1.1 times the contract price, plus the value of products and design services the owner supplies, with a deductible of no more than $10,000 unless the owner agrees. It also requires boiler and machinery insurance that includes hot testing and commissioning.

What are soft costs in builder's risk insurance?

Soft costs are the added expenses caused when an insured loss delays completion, rather than the cost of rebuilding. They typically include extra interest on construction financing, property taxes, additional architect, engineering and legal fees, and marketing costs. They are only covered if the policy includes a soft costs extension with a limit sized to a realistic delay.

What is delay in start-up coverage?

Delay in start-up pays the income an owner loses when an insured loss pushes back a project's completion, such as rent from tenants or profit from a new plant. It works like business interruption for a building that isn't finished yet, and is usually measured from the scheduled completion date after a waiting period.

When does builder's risk coverage end?

Usually at completion, occupancy or policy expiry, whichever the wording triggers first. Many wordings also end coverage once part of the building is occupied for purposes other than construction or equipment testing, or after a set period with no construction activity. The permanent property policy should start the day builder's risk ends.

Does builder's risk cover a renovation?

Yes. Renovation builder's risk covers the new work and materials, while the existing structure normally stays on the owner's property policy. Tell the building's insurer before work starts, because a major renovation is a material change in risk, and many property policies restrict cover during renovation or vacancy.

Are the contractor's tools covered by builder's risk?

No. Builder's risk covers the work and materials intended to become part of the project. Contractors' tools, machinery and equipment need their own tools and equipment floater, which follows them between job sites, vehicles and storage. CCDC 41 requires contractors' equipment insurance on an all risks basis with no subrogation against the owner.

How much does builder's risk insurance cost?

It is priced as a rate on the completed project value for the policy term. The rate depends on construction type, with frame the hardest to place, project size and schedule, location, site security, contractor experience, loss history, deductibles and extensions such as soft costs. Increasing the value mid-term is usually charged back to the start.

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In short

Builder's risk insurance, also called course of construction insurance, covers a building or project while it is being built or renovated. It pays to repair or replace the work, materials on site, in transit and in storage, and temporary works after insured damage such as fire, theft, vandalism or windstorm. It can be extended to cover soft costs, delay in start-up and equipment testing, and it ends at completion, occupancy or expiry.

Last reviewed October 26, 2026

Contract price multiple for the builder's risk limit under CCDC 41 (2020): 1.1×; Contract price multiple for the builder's risk limit under CCDC 41 (2020)
Maximum deductible on builder's risk under CCDC 41, unless the owner agrees otherwise: $10,000; Maximum deductible on builder's risk under CCDC 41, unless the owner agrees otherwise
Non-residential construction costs, year over year, Q2 2026 (StatCan): +3.5%; Non-residential construction costs, year over year, Q2 2026 (StatCan)
Canadian insurers we compare for construction risks: 17; Canadian insurers we compare for construction risks

Builder's risk, also called course of construction insurance, covers a building while it is being built or renovated: the work itself, materials on site, in transit and in storage, and temporary works, against fire, theft, vandalism, windstorm and other insured damage. With the right extensions it also pays soft costs, lost rent or profit from a delayed opening, and damage during equipment testing and commissioning.

Most builder's risk problems come from the set-up, not the claim: a limit based on an early estimate, the wrong party named as insured, no soft cost cover, or coverage that ended quietly when the first tenant moved in. We read your contract, including any CCDC 41 requirements explained in our construction and contractor insurance guide, and place the policy per project or on an annual form, alongside your tools and equipment and liability coverage.

What's covered

The structure and work in progress, at completed value
Materials on site, in transit and in off-site storage
Temporary works, scaffolding, formwork and hoarding
Theft, vandalism, fire and weather damage during construction
Soft costs: interest, taxes, fees and other added costs of delay
Delay in start-up for lost rent or profit
Hot and cold testing and commissioning, where included
Renovation projects alongside the existing building's insurance

What builder's risk insurance covers

A building under construction isn't a finished building, and an ordinary commercial property policy isn't written for it. Builder's risk is written for the project itself, from the first materials on site to handover.

The work: the structure and everything being built into it, at its value as the project progresses.
Materials and equipment for incorporation: stored on site, in transit to the site, and in temporary storage elsewhere, usually to sublimits for transit and off-site storage.
Temporary works: scaffolding, formwork, hoarding, temporary heat and site trailers, where the policy includes them.
Debris removal and the cost of cleaning up after a loss, usually within or on top of the limit.
Soft costs and delay in start-up: the extra interest, fees and lost income caused by a delayed completion, if the policy is extended to cover them.
Testing and commissioning: damage while new mechanical and electrical systems are tested, if included.
Existing structure on a renovation: either on the builder's risk policy or, more often, left on the owner's own property insurance with the insurer's consent.

Builder's risk covers physical damage only. Injury and damage to others are for the contractors' commercial general liability or a project wrap-up, and contractors' own tools and machines go on a tools and equipment floater.

Who buys builder's risk: owner or contractor

The construction contract decides. Under CCDC 41, the insurance schedule used with Canadian Construction Documents Committee contracts, the contractor arranges broad form property insurance for the project. On other projects, especially with institutional owners, developers and owners who build often, the owner insures the project and the contractor relies on that policy.

Whoever buys it, everyone with a financial stake in the work should be an insured: the owner, the general contractor, subcontractors, and usually the lender as mortgagee or loss payee. Insuring all of them on one policy, with a waiver of subrogation between them, stops the insurer from paying the claim and then suing the trade that caused it. Contractors relying on an owner's policy should ask for its wording and deductible, because the contract may charge the deductible back to whoever caused the loss.

Renovations need extra care. Tell the existing building's insurer before work starts, because a major renovation is a material change and many property policies restrict coverage while a building is under renovation or vacant. Our guide to how the 30-day vacancy clause works explains why. Renovators and trades will find the rest of their program in our construction and contractor insurance guide.

How a builder's risk policy actually works

Builder's risk differs from an annual property policy in almost every mechanic. The limit, the premium and the term are all tied to the project.

Key builder's risk policy mechanics
Mechanic	How it usually works	Watch for
Limit	The completed value of the project: materials, labour and the contractor's overhead and margin, plus any owner-supplied items	A limit set from an early estimate can fall behind change orders and price increases
Premium	A rate on the completed value for the full term, because the insurer's exposure grows as the building rises	Increasing the value mid-term is typically backdated and charged for the whole term
Term	Set to the realistic construction schedule. One Canadian market writes terms of 3 to 18 months, in 30-day increments	Extensions usually cost more and must be requested before expiry
Start	Before work or deliveries begin. One Canadian market recommends binding when forming for the foundations starts	That market notes most insurers won't take on a project already under way
End	On completion, occupancy, expiry, or extended inactivity, whichever the wording triggers first	One market's wording ends cover after 30 consecutive days without construction activity
Deductible	A flat amount per occurrence, sometimes with separate deductibles for water damage, theft or windstorm	CCDC 41 caps the property deductible at $10,000 unless the owner agrees otherwise
Annual or reporting form	Builders who start projects continuously can insure them on one annual policy and report each start	Every project must be reported on time, or it may not be covered

Occupancy is the trigger that catches owners out. One Canadian market's wording ends coverage on the use or occupancy of any part of the project unless that use is for construction, office or residential purposes, or for installing, testing or storing equipment. Arrange the permanent property policy before the first tenant or buyer moves in.

Soft costs and delay in start-up

A serious fire doesn't only destroy materials and labour. It delays completion, and the delay has its own price. Builder's risk can be extended to pay for it.

Soft costs: one Canadian soft costs endorsement lists interest on construction financing, real estate and property taxes, architect, engineering and consultant fees, legal and accounting fees, advertising and promotion, and commissions for renegotiating leases.
Delay in start-up: the rental income or gross profit the owner would have earned if the project had finished on time. It is the construction-stage version of business interruption and is measured from the scheduled completion date, after a waiting period.
Advance loss of profits: the same idea for industrial and energy projects, offered by specialist markets for larger Canadian projects.

Soft cost and delay limits must be calculated, not guessed. Specialist markets such as Berkshire Hathaway Specialty Insurance ask for a delay or soft cost worksheet with the submission. The worksheet should cover financing costs for the longest realistic delay, plus the time needed for adjustment, redesign and permits after a loss.

Testing, commissioning and equipment breakdown

The riskiest weeks on many projects come near the end, when boilers, chillers, electrical gear and production lines are switched on for the first time. A standard builder's risk form often excludes or restricts mechanical and electrical breakdown and damage during testing.

CCDC 41 requires separate boiler and machinery insurance for permanent or temporary boilers, pressure vessels and other insurable objects forming part of the work, at their replacement value, including hot testing and commissioning. Cold testing checks systems without full load. Hot testing runs them under operating conditions and carries much higher risk. Make sure the policy names both if the project includes them, and arrange equipment breakdown cover for the finished building at handover.

Common exclusions, and how to close the gaps

Typical builder's risk exclusions and where the cover comes from
Excluded or limited	How to cover it
Faulty workmanship, materials or design	Most forms exclude the defective part but cover resulting damage; ask for the broadest resultant-damage wording available
Mechanical and electrical breakdown, including during testing	Boiler and machinery cover with hot and cold testing, as CCDC 41 requires
Flood and earthquake	Endorsements where available, often with separate deductibles and sublimits
Water damage and freezing	Usually covered, but often with a higher deductible and conditions on temporary heat and water shut-off
Theft of materials not yet installed	Covered on most forms, subject to site security conditions such as fencing, lighting and locked storage
Contractors' tools and equipment	A tools and equipment floater
Liability to others	Commercial general liability or a wrap-up
Occupancy or long inactivity	Notify the insurer in advance; move to permanent or vacant property cover
Wear and tear, rust, mould and pests	Not insurable; managed on site

Builder's risk vs. property, installation and liability cover

How builder's risk compares with the coverage it is most often confused with
	Builder's risk	Installation floater	Commercial property	CGL or wrap-up
What it insures	The whole project under construction	One trade's materials and equipment until installed and accepted	A completed, occupied building and its contents	Injury and damage to others
Usually bought by	Owner or general contractor	Subcontractor or installer	Building owner or tenant	Each contractor, or the owner for a wrap-up
Limit based on	Completed project value	Value of the installation	Replacement cost of the finished building	Contract requirements
Ends	Completion, occupancy or expiry	Acceptance by the owner	Annual renewal	Annual renewal or end of the wrap-up period

CCDC 41 and contract requirements

Most Canadian construction contracts set the builder's risk requirement directly. The December 14, 2020 edition of CCDC 41 asks for:

Broad form property insurance with a limit of at least 1.1 times the contract price, plus the full stated value of products and design services the owner supplies for the work.
Coverage no narrower than that provided by IBC Forms 4042 and 4047, or their equivalent replacement.
A deductible of no more than $10,000, which the owner may agree to raise if the contractor proves financial capability.
Boiler and machinery insurance at replacement value for boilers, pressure vessels and other insurable objects in the work, including hot testing and commissioning.
All risks contractors' equipment insurance that doesn't allow subrogation against the owner.

The 10% margin over the contract price is there for debris removal, price increases and change orders. Costs keep rising: Statistics Canada's non-residential building construction price index was up 3.5% year over year in the second quarter of 2026. Owners often amend CCDC 41 or use an older edition, so send us the insurance section of every contract before you sign.

Worked example: a fire at 70% complete

A hypothetical general contractor is building a $4,000,000 three-storey commercial building under a CCDC contract. It insures the project at 1.1 times the contract price, a $4,400,000 limit, with a $10,000 deductible and a soft costs extension.

At 70% complete, a fire starts in temporary heating and destroys the upper floor and roof. The builder's risk policy pays to clear debris and rebuild the damaged work at current prices, less the deductible. The soft costs extension pays the owner's extra construction loan interest, property taxes and re-engineering fees for the five-month delay. The owner's delay in start-up cover pays the rent it would have collected from its anchor tenant.

Now change one fact. The contractor had insured the project at an early $3,600,000 estimate and bought no soft cost cover. The rebuild is limited by the lower amount, and the delay costs fall on the owner, who will look to the contract to recover them.

What builder's risk insurance costs

Builder's risk premiums are a rate applied to the completed project value for the policy term. Underwriters set the rate from:

Construction type: frame construction is the hardest to place. Some specialist markets restrict frame and joisted masonry projects entirely, while non-combustible construction rates far better.
Project size, height and term: higher values and longer schedules mean more exposure.
Location: hydrant distance, fire protection, flood mapping, crime and weather exposure.
Site security and fire prevention: fencing, lighting, cameras, guards, hot work permits and how temporary heat is managed.
Contractor experience and builder's risk loss history, typically for the last five years.
Deductibles and extensions: soft costs, delay in start-up, testing, flood and earthquake.

The wider market helps. Marsh's Global Insurance Market Index put Canadian commercial property rates down 8% in the third quarter of 2026. A complete submission still matters most: drawings, schedule, values breakdown, site plan and security measures.

How we place builder's risk insurance

Insurabiz is an independent brokerage that works only in business insurance. We place builder's risk per project or on annual forms for builders who start projects continuously.

1Read the contract: we check the insurance clause, CCDC 41 amendments, lender requirements and who must be insured.
2Value the project: we set the limit from the contract price, owner-supplied items and realistic soft cost and delay figures.
3Build the submission: drawings, schedule, construction type, site security and your loss history.
4Market: we approach the insurers on our panel of 17 whose appetite fits the project's size, type and location.
5Compare: we weigh wording, deductibles, sublimits, occupancy and inactivity conditions, not just premium.
6Diarize: we track the schedule, extensions and the handover to permanent property insurance so no gap opens.

Contractors who also need bonds for the same project can arrange them through our contract surety team, and developers should see residential surety.

If you have a loss on site

1Make the site safe and call emergency services if needed.
2Protect the work from further damage: tarp openings, shut off water and secure the site. Reasonable costs are usually claimable.
3Report theft and vandalism to police and keep the report number.
4Notify your broker and insurer promptly, in writing.
5Photograph the damage before cleanup and keep invoices, delivery slips and payroll records that show what was in place.
6Track delay and extra costs from day one if you have soft cost or delay in start-up cover.

Our claims team works with you, the owner and the adjuster from first notice to settlement. Our post on insuring the project before it exists covers start dates and occupancy in more detail.

Good to know

Frequently asked questions

What does builder's risk insurance cover?: Builder's risk covers a project while it is under construction or renovation: the work itself, materials on site, in transit and in storage, and temporary works such as scaffolding and formwork. It responds to insured damage such as fire, theft, vandalism and windstorm, and can be extended to pay soft costs, lost income from a delayed opening and damage during equipment testing.
Who should buy builder's risk, the owner or the contractor?: The construction contract decides. Under CCDC 41 the contractor arranges broad form property insurance for the project. On other projects the owner insures it and the contractor relies on that policy. Either way, the owner, contractor, subcontractors and lender should all be insured on the policy, with subrogation waived between them.
How much builder's risk insurance does CCDC 41 require?: The 2020 edition of CCDC 41 requires broad form property insurance of at least 1.1 times the contract price, plus the value of products and design services the owner supplies, with a deductible of no more than $10,000 unless the owner agrees. It also requires boiler and machinery insurance that includes hot testing and commissioning.
What are soft costs in builder's risk insurance?: Soft costs are the added expenses caused when an insured loss delays completion, rather than the cost of rebuilding. They typically include extra interest on construction financing, property taxes, additional architect, engineering and legal fees, and marketing costs. They are only covered if the policy includes a soft costs extension with a limit sized to a realistic delay.
What is delay in start-up coverage?: Delay in start-up pays the income an owner loses when an insured loss pushes back a project's completion, such as rent from tenants or profit from a new plant. It works like business interruption for a building that isn't finished yet, and is usually measured from the scheduled completion date after a waiting period.
When does builder's risk coverage end?: Usually at completion, occupancy or policy expiry, whichever the wording triggers first. Many wordings also end coverage once part of the building is occupied for purposes other than construction or equipment testing, or after a set period with no construction activity. The permanent property policy should start the day builder's risk ends.
Does builder's risk cover a renovation?: Yes. Renovation builder's risk covers the new work and materials, while the existing structure normally stays on the owner's property policy. Tell the building's insurer before work starts, because a major renovation is a material change in risk, and many property policies restrict cover during renovation or vacancy.
Are the contractor's tools covered by builder's risk?: No. Builder's risk covers the work and materials intended to become part of the project. Contractors' tools, machinery and equipment need their own tools and equipment floater, which follows them between job sites, vehicles and storage. CCDC 41 requires contractors' equipment insurance on an all risks basis with no subrogation against the owner.
How much does builder's risk insurance cost?: It is priced as a rate on the completed project value for the policy term. The rate depends on construction type, with frame the hardest to place, project size and schedule, location, site security, contractor experience, loss history, deductibles and extensions such as soft costs. Increasing the value mid-term is usually charged back to the start.

Sources

CCDC 41, CCDC Insurance Requirements (publication date December 14, 2020). Canadian Construction Documents Committee, as published by the Roofing Contractors Association of BC, December 14, 2020.
FAQ: Builders Risk Insurance. Premier Group, January 12, 2022.
Builder's Risk Appetite Guide, Canada (CAN-11/2025-A). Berkshire Hathaway Specialty Insurance, November 2025.
Building construction price indexes, second quarter 2026. Statistics Canada, The Daily, July 24, 2026.
Canada commercial insurance rates fall for third straight year (Marsh Global Insurance Market Index, Q3 2026). Insurance Business Canada, October 21, 2026.

This page is general information, not insurance or legal advice. Coverage depends on your policy wording and the insurer. Speak with a licensed broker about your situation.

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