Why do I need Course of Construction insurance when building my home?

Great question! Let’s answer some basic questions and get a better understanding of the product and its benefits.

What is Course of Construction Insurance?

Course of Construction (COC) insurance, also known as Builder’s Risk, is a coverage provided to people (and businesses) developing new properties. A ‘COC’ policy covers the structure and materials, as well as liability issues that can arise, during the construction and building of a new project.

So why do you need it?

We’ll let’s lay out a scenario.

Imagine you have just purchased a property with a less than desirable home on it; therefore, you decide to tear it down and re-build the house. You have gone through the timely (and costly) process with the city, you have completed the architectural drawings and engineering reports, and you have hired a general contractor. Now fast forward a few months (and hundreds of thousands of dollars later) and consider that the contractor is now half-way through your project.

Then the worst happens…the contracted calls you to let you know that the structure has been devastated by a fire – your capital, and everything it was used for, is now gone. This is why we need COC.

Doesn’t the contractor have insurance?

Some clients think that the COC risk is covered by the general contractor; however, the construction company’s policy is for their own property and liability purposes, so since they don’t own the property, (and let’s assume they are not liable or at fault for the destruction) then it will fall on the owner to cover these construction costs.

Remember they don’t own the home they are building. It would be like a mechanic taking out insurance on your vehicle – you insure your own car because it’s yours!

What is covered under a Builder’s Risk policy?

Some of the typical coverages include:

• Fire

• Lightning

• Explosion

• Impact by aircraft or vehicles

• Riot, vandalism and malicious acts

• Windstorm, hail and rain

• Burglary and theft

• Collapse

• Subsidence

Whether you are a developer building a high-rise, or an individual building their primary residence, give an Alteri agent a call, or email us at info@alteri.ca so we can help!