Building a New Home? Your Regular Insurance Won’t Cover It
There’s nothing more exciting—and overwhelming—than building your dream home. Whether you’re managing the process yourself or working with a builder, you’ve likely lined up your plans, permits, contractor, and financing. But have you considered what happens if a fire, theft, or windstorm strikes before your home is finished?
Most people assume their homeowners policy covers them during construction. Unfortunately, that’s rarely true.
If your new home is under construction, you likely need Builder’s Risk Insurance (also known as Course of Construction insurance). It’s a specialized form of property coverage designed to protect buildings in progress—from the first nail to the final inspection.
What Is Builder’s Risk Insurance?
Builder’s Risk Insurance is a temporary policy that protects residential structures while they’re being built. It covers:
- The physical structure as it’s being constructed
- Materials stored on-site or in transit
- Labour and equipment involved in the build
It is also known as Course of Construction (COC) insurance, and it serves a very different purpose than traditional homeowners insurance. While your homeowner’s policy kicks in once a home is completed and occupied, COC is what bridges the gap during the build phase.
👉 Learn more or get a Builder’s Risk quote now.
Why Doesn’t Homeowners Insurance Apply?
In Canada, most homeowner’s insurance policies come with a key clause: they only cover completed and occupied dwellings. As soon as a property becomes vacant, under renovation, or under construction, most policies either:
- Deny coverage
- Include major exclusions (such as fire or theft)
- Require additional endorsements that often don’t go far enough
If your foundation has just been poured and your walls aren’t up, a standard policy likely won’t protect you.
This is where Builder’s Risk coverage becomes essential.
What Does Builder’s Risk Insurance Cover?
Typical COC policies in Canada include protection against:
- Fire
- Theft or vandalism
- Windstorms and hail
- Lightning
- Explosion
- Building material loss
- Construction equipment damage (in some cases)
If a windstorm knocks down your partially built frame or someone steals $20,000 worth of copper wiring overnight, a Builder’s Risk policy ensures you’re not footing the entire bill.
Coverage can be customized based on the scale and location of your project, as well as the risks common to your area.
When Does Course of Construction Insurance Start and End?
Start: Your policy typically starts when construction begins—often when the first shovel hits the ground. You’ll need to confirm this with your insurance provider, as some lenders require proof of insurance before issuing final funds.
End: The policy usually ends when:
- The project is completed and passed inspection
- The home becomes occupied
- A permanent homeowner’s policy takes over
That’s why it’s critical to line up your Builder’s Risk coverage before construction begins, and have your regular homeowner’s insurance ready to kick in when the build is complete.
Who Needs It?
Builder’s Risk Insurance is essential for:
- Owner-builders constructing their own home
- Contractors or developers building on behalf of a client
- Homeowners working with general contractors
- Anyone with a construction mortgage or bank financing
Most lenders will not release final mortgage funds until you can show proof of COC coverage.
It’s especially important for projects with longer build timelines or high-value materials that can be damaged or stolen during the process.
Real-World Risk: A Canadian Example
Imagine this scenario:
You’ve just started building a 2,000 sq. ft. custom home outside Calgary. The framing is up, the windows are in, and the roof is half complete. Then, one night, a windstorm tears through the site, destroying materials and toppling scaffolding. Your contractor’s liability insurance doesn’t cover property damage—and your homeowner’s insurance hasn’t kicked in yet.
Without COC insurance, you could be out tens of thousands of dollars. With it, your rebuild and material costs would be protected.
How Much Does Builder’s Risk Insurance Cost in Canada?
Costs vary based on:
- Location (e.g., high-risk flood zones cost more)
- Project value (a $2M luxury build will cost more than a $300K cabin)
- Project duration (longer builds = higher risk)
- Coverage limits and deductibles
For most residential projects, premiums range from $500 to $2,000.
That’s a small investment compared to the risk of an uninsured loss.
👉 See how much your project would cost with a Builder’s Risk quote.
Tips for Buying the Right Builder’s Risk Policy
- Start early – Apply before the project begins. Some insurers won’t backdate coverage.
- Get the right limits – Your coverage should match the total completed value of your home.
- Include soft costs if needed – These can include architectural fees, financing charges, or legal costs.
- Clarify exclusions – Ask if floods, earthquakes, or specific materials are excluded.
- Check if your contractor is covered – Some policies include tradespeople, others do not.
Final Thoughts: Don’t Build Without It
If you’re building a new home in Canada, don’t assume your homeowner’s insurance has your back. Construction comes with unique risks, and Builder’s Risk (Course of Construction) insurance exists to protect your investment during this crucial phase.
It’s not just about peace of mind—it’s about ensuring your dream home isn’t derailed by fire, theft, or an unexpected disaster before you ever move in.
🛠️ Ready to protect your build? Get a quote or speak to an advisor now.
