Construction projects represent some of the most complex risk exposures in the insurance marketplace. From the moment ground is broken until the final certificate of occupancy is issued, a construction site presents a shifting landscape of perils, stakeholders, and values at risk. Builders risk insurance, sometimes called course of construction coverage, exists precisely to address this unique exposure by providing property insurance for buildings and structures during the construction phase. Unlike standard property policies designed for completed and occupied buildings, builders risk coverage responds to the distinctive characteristics of construction sites: the incremental accumulation of value as materials arrive and work progresses, the involvement of multiple parties with overlapping interests in the same property, the elevated exposure to certain perils due to the nature of construction activity, and the temporary nature of the risk itself. Understanding how this coverage operates, who should be named as insureds, and how it interacts with the obligations of various project participants is essential knowledge for insurance professionals, risk managers, contractors, developers, and their legal advisors across Canada.
The fundamental purpose of builders risk insurance is to protect against direct physical loss or damage to a building or structure under construction, including materials, equipment, and supplies intended to become part of the completed project. This coverage typically extends from the commencement of construction activities through to the point of substantial completion, final acceptance by the owner, or occupancy, whichever occurs first. The policy provides first-party property coverage, meaning it indemnifies the insured parties for their own losses rather than their liability to third parties. The distinction matters because construction projects generate significant liability exposures as well, but those risks are addressed through separate commercial general liability policies and other coverage forms. Builders risk insurance fills a specific gap that would otherwise exist because standard property policies are designed for completed buildings and typically exclude property under construction or contain limitations that make them inadequate for covering construction-phase exposures.