When a building construction project occurs as either a new build or renovation of an existing structure, the first coverage that comes to mind is usually a Builder’s Risk policy (also called a Course of Construction or COC policy).
Course of Construction protects all parties that have an insurable interest in a construction project including the owner, contractors, and subcontractors. It protects you from a property loss during the course of your construction project (get it?) due to fire, extreme weather, flooding or accidents. Every construction project carries its own unique risk regardless of its size. Protecting your project will help contractors, tradespeople, and suppliers avoid huge financial losses.
While Course of Construction offers a wide range of physical damage protection for construction projects, what other insurance coverages are available to the construction industry?
An Installation Floater policy can be used to supplement a Course of Construction policy and can also be used on its own. This policy provides coverage only to the policy holder – such as a specific contractor. Installation floaters are often used for plumbing, electrical, heating, cooling, or HVAC installations. They can also be used for other property installations such as flooring, appliances, tiles and windows.
This type of policy covers several types of moveable property – property (to be installed) in transit to or from your worksite, as well as property on the premises awaiting installation. It also covers property in the course of being installed, including labour, so you’re protected if there is a loss part-way through the job. As a tradesperson or contractor, you can obtain a blanket policy for all work performed with limits set on average and/or maximum installation exposures. An Installation floater may not be necessary if there is already a Course of Construction policy in place that includes the interests of all subcontractors. However, it is still good practice for subcontractors to carry their own Installation Floater to protect their own interests, especially as this coverage is both broad and relatively inexpensive.
Blanket Course of Construction
A Blanket Course of Construction policy is an option to insure your construction business for a whole year instead of insuring each individual construction project. It provides pre-approved COC limits that can be applied to multiple construction projects at different locations or buildings. Blanket coverage can also eliminate some of the administrative hassle that comes with insuring individual construction projects and locations. Generally, Blanket COC policy premiums are adjusted on an annual basis based on the amount of work performed, which means you are only paying for the coverage you’re actually using.
Ask yourself how many projects you expect to take on in the next 12 to 18 months to determine if blanket Course of Construction would be beneficial for your business.
Whether you are considering a Course of Construction policy, an Installation Floater, or both: these insurance policies must be reviewed properly in order to avoid unanticipated exposures. Review all property that is included or not included in the policy, as well as tools and material in transit and storage. Although not addressed in this post, policies covering liability, such as Wrap-Up Liability, Errors & Omissions (E&O) and/or Commercial General Liability (CGL) are also an important part of your insurance program.
If you need help deciding what coverage is right for your construction company, contact our expert team of brokers to find the best coverage available to protect your business. You can also visit our Contractors, Construction and Trades page for more information.