Building a Detached Structure? Your Home Insurance Likely Won’t Cover It
Thinking about adding a new garage, backyard laneway home, or garden suite? You’re not alone. Across Canada, thousands of homeowners are expanding their properties with detached builds—either to add rental income, create multigenerational living, or simply enjoy more usable space.
But here’s the problem: your regular home insurance policy doesn’t cover new structures during construction. Without proper insurance in place, one bad storm or theft could cost you tens of thousands.
That’s where Course of Construction insurance (COC)—also known as Builder’s Risk—comes in.
What Is Covered Under Course of Construction Insurance?
COC insurance is a short-term policy that protects structures under construction. It covers:
- The structure itself (framing, foundation, roof, etc.)
- Building materials stored on-site or in transit
- Installed systems (HVAC, plumbing, electrical)
- Appliances and finishes once placed or installed
- Labour costs invested up to the point of loss
This type of policy is designed specifically for new builds like:
- Detached garages
- Laneway homes
- Garden suites
- Coach houses
- Backyard rental units
👉 Get covered before you build – get a quote now
Why Doesn’t Home Insurance Cover These Projects?
Most Canadian home insurance policies are written for completed, occupied homes. Once you begin building a new structure from the ground up, your risk profile changes dramatically.
Insurers may deny claims or exclude the new structure entirely unless you have specific Course of Construction coverage in place.
Risks include:
- Fire from tools or temporary wiring
- Theft of tools, appliances, and materials
- Vandalism on exposed job sites
- Weather damage during framing or roofing
- Collapse of incomplete structures
Even prefabricated units need coverage during placement and finishing.
What Counts as a Laneway Home, Garden Suite, or Detached Garage?
✅ Laneway Home
A small house built on the rear of a property facing a back lane. Common in urban areas like Toronto and Vancouver. Includes full kitchen, bath, and sleeping areas.
✅ Garden Suite (Coach House)
A detached unit built in a backyard or side yard (not always on a laneway). Similar to a laneway home but accessible from the front or side yard.
✅ Detached Garage
A standalone garage that may be a simple carport or an advanced structure with insulation, heating, storage lofts, or finished workspaces.
All of these are classified as Accessory Dwelling Units (ADUs) under Canadian zoning law.
Do I Need Insurance Even for a Simple Garage?
Yes—if you’re:
- Pouring a new foundation
- Framing new walls or roofing
- Wiring or plumbing the structure
- Storing materials on-site during construction
Even basic detached garages present risks like fire, injury, and theft. Most contractors will require COC coverage to protect their work as well.
Municipal Requirements by Province
Ontario
Toronto, Ottawa, and Hamilton all allow laneway and garden suites. You’ll often need:
- Permit applications
- Utility servicing plans
- Proof of construction insurance
British Columbia
Vancouver has led the country in laneway development. Most builders require:
- Builder’s Risk or COC coverage
- Site inspections
- Fire code compliance
Alberta
Edmonton and Calgary allow garden suites and garage conversions. Requirements vary but insurance is recommended regardless of municipal thresholds.
💡 Lenders often require COC insurance before releasing financing draws for backyard construction projects.
Real-World Examples: Covered or Not?
Scenario 1:
You’re building a $60,000 heated garage with electrical and insulation. → COC insurance required
Scenario 2:
A prefab laneway home is craned into your backyard and connected on-site. → COC insurance needed during setup and finishing
Scenario 3:
You’re converting an old garage into a legal rental suite with plumbing and HVAC. → Likely Builder’s Renovation insurance if you remain in the main house; COC if full gut
Risks to Watch For
- Fire from welding, temporary heat, or incomplete wiring
- Theft of appliances, copper, tools
- Weather Damage during exposed framing or roofing
- Collapse from windstorms or structural failures
- Liability if workers or trespassers are injured on-site
How Much Does Course of Construction Insurance Cost?
Costs vary based on:
- Project value
- Location (Ontario, BC, and Alberta vary)
- Duration
- Risk profile
Typical premiums:
- Detached garages: $300–$800
- Laneway or garden suites: $800–$2,000+
Coverage usually lasts 3 to 12 months and can be cancelled once the build is complete and replaced with permanent property insurance.
When Should I Get It?
Before the first nail hits the wood. Most brokers recommend securing your policy:
- When applying for permits
- Before material delivery
- Before excavating or pouring concrete
- Before your builder starts work
Waiting too long could expose you to uninsured risk—and some insurers won’t backdate coverage.
Final Thoughts: Cover Your Backyard Build
Whether you’re building a garage, a laneway home, or a luxury backyard suite, don’t rely on your home insurance to cover the project. Detached builds need dedicated coverage during construction.
Course of Construction insurance is affordable, flexible, and required by many cities and lenders. It protects your build, your investment, and your peace of mind.
🔨 Planning a backyard build? Get protected before you break ground.
👉 Get a fast, free Course of Construction quote now
