Builder's Risk Insurance in Ontario, Canada

Construction Insurance | Boardwalk Insurance — A Division of Oracle RMS

Builder's Risk insurance is a project-specific property policy that covers a building or structure under construction against physical loss or damage — from fire, theft, vandalism, weather, and collapse — from the moment construction begins until the project reaches substantial completion and transitions to a permanent property policy. It is required by virtually every construction lender in Canada before releasing financing, and it protects the insurable interests of the builder, the property owner, and any lender who has advanced funds against the project. Boardwalk Insurance serves contractors, builders, and developers across Ontario and Canada with fast Builder's Risk quotes from 30+ A-rated carriers. Serving all provinces except Quebec.

Get a Free Quote | Book a Meeting

5/5 Rating — 69+ Reviews | 15+ Years Experience | Dedicated Claims Support | 30+ Carriers

What Is Builder's Risk Insurance?

Builder's Risk insurance — also called Course of Construction insurance — is a property insurance policy specifically designed to cover the physical structure being built, along with the materials, fixtures, and equipment that are part of that structure, during the construction period. It fills the gap that exists between the start of construction and the moment a completed building can be insured under a standard commercial property or homeowner's policy.

A completed building and a building under construction are fundamentally different insurance risks. A completed structure has permanent fire suppression systems, locked entrances, functioning utilities, and established weather protection. A structure under construction has none of those protections — it is open to the elements, accessible to unauthorized persons, and at risk from every stage of the construction process. Standard property insurance policies are written for completed structures and explicitly exclude or severely limit coverage for property under active construction.

Builder's Risk fills this gap by covering the structure and materials from the first day of construction through substantial completion, addressing the specific perils of the construction phase.

Who Holds the Builder's Risk Policy?

Builder's Risk policies can be purchased by the general contractor, the project owner, or a lender — depending on the project structure and contract terms. For residential new construction, the builder or general contractor typically purchases the policy. For commercial development, the developer or project owner often purchases it. Some lenders require that their interest be noted on the policy as a loss payee before releasing construction draws.

What Does Builder's Risk Insurance Cover?

Builder's Risk policies in Canada are typically written on an "all-risks" or "open perils" basis — meaning all causes of physical loss are covered unless a specific exclusion applies. This is broader than a named-perils approach and provides the most comprehensive protection for the construction period.

Covered Perils

Fire, explosion, and lightning — including fires from hot work, temporary heating units, and electrical faults during construction
Theft and vandalism — theft of materials, tools, and staged equipment from the site; vandalism to partially-complete work
Wind and hail — storm damage to partially-complete structures before the building envelope is closed
Water damage — rain entering through unenclosed openings, burst pipes during cold weather, and accidental flooding
Collapse — structural collapse during construction due to construction loads, equipment, or material failure
Impact — damage from vehicles, falling objects, and construction equipment accidents

What Is Covered

The structure under construction — framing, concrete, masonry, exterior cladding, roofing in progress
Building materials stored on-site or in a staging yard awaiting installation
Temporary structures — formwork, scaffolding, temporary enclosures
Fixtures and mechanical/electrical systems partially installed
Materials in transit from the supplier to the site (typically up to a specified sublimit)

Soft Costs Coverage

Many Builder's Risk policies can be extended to include soft costs — the additional expenses that a project owner or builder incurs as a direct result of a covered physical loss and the resulting construction delay. Soft costs typically include:

Architect and engineering fees for redesign following a loss
Building permit and reapplication fees
Construction financing carrying costs (additional interest on the construction loan during the delay period)
Real estate taxes and insurance premiums during the delay
Marketing and leasing costs lost due to the delayed opening of a commercial project

Soft costs coverage is particularly valuable for commercial development projects where delays carry significant carrying costs. For residential builders, the primary soft cost exposure is additional construction financing interest during the reconstruction period.

Common Exclusions

Builder's Risk policies exclude certain perils that require separate coverage:

Earthquake and overland flooding — available by endorsement in most markets
Faulty workmanship itself — the cost of redoing defective work is not covered, but consequential damage caused by defective work (e.g., a fire caused by faulty wiring) typically is
Design errors — losses arising from design defects are not covered by Builder's Risk; these require Professional Liability (E&O) coverage
Employee dishonesty — theft by employees typically requires a separate crime or fidelity policy
Normal wear and tear, rust, and corrosion

Builder's Risk vs. Homeowner's Insurance: Why the Distinction Matters

This distinction is one of the most important and most frequently misunderstood in residential construction. A standard homeowner's insurance policy is written for a completed, occupied dwelling. It is not designed to cover a structure under active construction, and most homeowner's policies contain explicit exclusions or severe coverage limitations for property in the course of construction.

The practical consequence: a residential builder, developer, or homeowner who relies on an existing homeowner's policy to cover a structure during construction typically has no coverage for a construction-phase loss. If a fire destroys a partially-framed home, the only policy that responds is a Builder's Risk policy specifically covering that project. The future buyer's homeowner's policy does not attach until possession is taken. The builder's own commercial property policy does not cover projects under construction unless specifically endorsed.

For renovation projects involving major structural work, the same gap analysis applies. A homeowner undertaking a major gut renovation should confirm with their homeowner's insurer whether coverage extends to the renovation period — and should obtain a Builder's Risk endorsement or policy if it does not.

→ See Boardwalk's Builder's Risk vs. Home Insurance Renovation Checker for guidance on specific renovation scenarios.

Annual Builder's Risk Programs vs. Project-Specific Policies

Project-Specific Policies

A project-specific Builder's Risk policy covers a single construction project for a defined period — typically the anticipated construction timeline. It is the right approach for:

A homeowner building or commissioning a single custom home
A developer with one active project at a time
A renovation contractor with an occasional major project requiring coverage

Project-specific policies are bound at the start of construction, set at the completed construction value, and expire at the earlier of the substantial completion date or the policy expiry date. If construction extends beyond the policy period, the policy must be renewed or extended before it lapses — a lender will typically suspend construction draws if they discover the Builder's Risk policy has expired.

Annual Blanket Programs

Builders who construct multiple homes or projects simultaneously benefit from an annual Builder's Risk program that provides blanket coverage across all projects under construction at any one time. Under an annual program:

All projects started during the program year are automatically covered from the first day of construction
Coverage limits are set based on the maximum value of all concurrent projects at any point during the year
The builder reports individual project values periodically rather than binding separate policies for each project
Premium is calculated based on annual construction volume, not individual project value

Annual programs eliminate the administrative overhead of per-project policy management and are typically more cost-effective for builders with significant annual volumes. They also eliminate the risk of coverage gaps from a new project starting before a project-specific policy is bound.

Who Needs Builder's Risk Insurance?

General Contractors and Home Builders

The primary party responsible for construction site safety and project delivery typically holds the Builder's Risk policy. GCs and home builders need Builder's Risk for every project to protect the value of work-in-progress and materials against loss during the construction period.

Property Developers and Project Owners

Developers who commission construction on their own land — residential subdivisions, commercial office or retail projects, industrial developments — carry the financial risk of the project during construction. Builder's Risk protects that investment from the start of earthworks through occupancy.

Renovation Contractors on Major Projects

Renovation contractors undertaking major structural renovations, additions, or gut renovations may need Builder's Risk in addition to their standard CGL, particularly when the scope of work is large enough that the homeowner's existing policy has coverage gaps for the renovation period.

Lenders and Mortgage Providers

Construction lenders typically require Builder's Risk insurance as a condition of the construction loan, with the lender noted as a loss payee on the policy. Without evidence of active Builder's Risk coverage, most institutional lenders will not release construction draws.

Key Builder's Risk Policy Terms

Completed Value Form: The policy limit is set at the anticipated completed construction value of the project, not the value of work-in-progress at any given moment. This ensures full coverage from the first day of construction.

Reporting Form: Used for annual programs, where the builder reports the value of each active project periodically and premium adjusts based on reported values.

Loss Payee: A party — typically a lender — that has a financial interest in the insured property and is entitled to receive insurance proceeds if a covered loss occurs.

Substantial Completion: The point at which the building is sufficiently complete for its intended use — typically the issuance of an occupancy permit. This is the standard end date for a Builder's Risk policy.

Vacancy Condition: Builder's Risk policies often contain provisions that affect coverage if a project is unoccupied and abandoned for an extended period (typically 30 to 60 days). A project that stalls due to financing or scheduling issues and sits dormant for months may trigger vacancy conditions that limit coverage.

Frequently Asked Questions About Builder's Risk Insurance in Ontario

Is Builder's Risk insurance mandatory in Ontario?

Ontario law does not mandate Builder's Risk insurance as a statutory requirement. However, it is practically mandatory because virtually every institutional construction lender requires it as a condition of the construction loan before releasing draws. Many lot purchase agreements, developer contracts, and prime contracts also require Builder's Risk independently of any lender requirement. Builders who self-finance construction or build on their own lots without financing may technically proceed without it, but the financial risk of doing so is severe — a single fire or major storm can destroy months of work and hundreds of thousands of dollars in materials with no coverage to respond.

What is the difference between Builder's Risk and Commercial Property Insurance?

Commercial property insurance is written for completed, occupied structures and their contents. Builder's Risk is written for structures under active construction. The key differences are: Builder's Risk covers the structure from groundbreaking through completion; commercial property begins when construction ends and the building is ready for occupancy. Builder's Risk covers the construction-specific perils (rain ingress through open structures, theft of staged materials, collapse during construction); commercial property covers the operational perils of an occupied building. The two policies should connect seamlessly — Builder's Risk ends as commercial property begins — with no gap between them.

How much does Builder's Risk insurance cost in Ontario?

Builder's Risk premiums are typically calculated as a percentage of the completed construction value. For standard residential construction in Ontario, rates generally range from 0.5% to 1.5% of project value, depending on construction type, project duration, location, and occupancy type. A $700,000 residential build might carry a Builder's Risk premium of $3,500 to $10,500. Commercial and industrial construction, projects with higher fire risk (wood-frame construction vs. concrete), and projects in locations with elevated weather risk carry higher rates. Annual programs for volume builders typically produce lower per-project effective rates than project-by-project policies.

Does Builder's Risk cover materials stored off-site?

Most Builder's Risk policies include coverage for materials stored temporarily off-site — in a staging yard, a supplier's warehouse, or a storage facility — up to a specified sublimit, typically expressed as a percentage of the policy limit or a fixed dollar amount. Materials in transit to the site are also typically covered up to a sublimit. If you regularly store significant quantities of high-value materials off-site, confirm with your broker that the off-site sublimit is adequate for your maximum off-site exposure.

What happens if my project runs over schedule and the Builder's Risk policy expires?

If a project extends beyond the Builder's Risk policy's expiry date, the policy must be renewed or extended before the expiry date arrives. A lapse in Builder's Risk coverage — even a single day — leaves the project uninsured during that period. For projects under construction financing, the lender will typically suspend draw advances if they discover the policy has lapsed, creating a financing crisis on top of a coverage gap. As soon as a project looks likely to extend beyond the original schedule, contact your broker to extend the policy period before expiry, not after.

Why Ontario Builders Choose Boardwalk Insurance for Builder's Risk

Boardwalk Insurance is a RIBO-registered commercial insurance broker serving builders, contractors, and developers across Ontario and Canada. We access 30+ A-rated carriers and place both project-specific Builder's Risk policies and annual blanket programs for builders with multiple concurrent projects.

Same-day certificates for lender loss payee requirements
Annual Builder's Risk programs for volume builders
Soft costs coverage structuring for commercial development projects
Coordination with CGL and other construction insurance components
30+ A-rated carrier market access

+1-416-477-9771 | sales@myboardwalk.ca | 10 Great Gulf Dr, Suite 202, Vaughan, ON L4K 0K7

Get a Free Quote | Book a Meeting