Builder's Risk Insurance in Ontario

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Written by Nolan Wilson Updated on October 17, 2025 min read

Protect your construction project with builder's risk insurance

Builder's risk insurance is a specialized type of property insurance designed to protect buildings, structures, and materials during new construction or major renovation projects. While not legally mandated in Ontario, it's highly recommended and can be purchased by homeowners, contractors, or developers. It fills a crucial gap as standard home and commercial policies typically exclude properties under construction.

This type of insurance is essential when renovating your home, building your dream home, or commercial space. The further you get into a build, the greater the cost, effort, and resources used. There is more to lose if something goes wrong. This is where builder's risk insurance can help. Our experts will ensure you have the coverage you need to protect your financial interests.

Top things to know about builder’s risk insurance

Builder's risk insurance is a type of property coverage designed to protect buildings, structures, and materials during construction or major renovation projects.
It covers property damage, theft, vandalism, fire, project interruption, supply delays, and materials.
While not legally mandatory in Ontario, it is highly recommended. It can be purchased by various parties involved, including homeowners, contractors, construction companies, building owners, developers, and subcontractors.
The premium is typically calculated as 1% to 4% of the total project cost (excluding land value), which includes all materials and labour.
Builder's risk insurance does not cover liability, which is addressed by general liability or wrap-up liability coverage.

What is builder's risk insurance?

Builder's risk insurance, also known as a course of construction policy, is a type of commercial property insurance. It covers workers and property owners during the building or renovation process. It applies to commercial and residential buildings and locations undergoing work.

Policies protect builders and workers against common perils when working on renovations, remodels, or construction. They also protect equipment used, materials, structures, and labour. These perils include fire, vandalism, and theft once the work has started.

When is builders risk insurance required?

Builder’s risk insurance applies to all types of major construction projects. It's not legally required, but highly recommended by insurance brokers. It's applicable in these situations:

New home construction
New commercial or industrial building construction
Major renovation to existing residential or commercial buildings
Building a second story or addition
If local or regional by-laws require it

Why do I need builder's risk insurance?

Unforeseen problems can and will arise on job sites. Unexpected damage and delays can increase budgets and put a big financial strain on all parties involved. For example, a supplier is out of stock on drywall, or your window manufacturer is experiencing production delays. Or, a storm damages your structure, forcing you to rebuild a portion of it. All these situations cost money and could put your project over budget.

Most commercial and home insurance policies exclude properties under construction. Without this insurance, you would have to absorb the additional project expenses, including property damage, delays, and other issues.

You may need builders' risk because you must purchase it to prove protection as a condition of the transaction. For some, you require it to comply with local or regional bylaws.

What does builder's all risk insurance cover?

Builders' risk coverage protects you from all threats that could damage your property under construction. It also covers the cost of repairing or replacing materials. Perils not covered are listed explicitly as exclusions.

Here’s a list of the most common perils included:

Property damage (causes of damage covered may vary by insurer)
Theft and vandalism
Fire and smoke damage
Project interruption
Supply delays
Materials, while being stored at another location or in transit to the job site
Landscaping on the property
Temporary buildings, structures, scaffolding, and infrastructure used during the project

What does builder's risk insurance not cover?

Builder's risk insurance does not apply to construction projects before they start or after the work is complete. Plans only cover losses that happen while the work is in progress.

There are specific perils that are commonly excluded. You can get an add-on or a separate policy. Common exclusions are:

Earthquakes and water damage
Employee theft
War and government action
Contract fees and penalties
Voluntary parting of the parties involved
Government action
Mechanical and equipment breakdowns
Faulty design
Bad planning or faulty materials
Other stated exclusions

Who buys builder's risk insurance policies?

The party responsible for builder’s risk insurance is a common question homeowners and builders debate.

Any party involved in the development can purchase a plan. However, the lead tradesperson or the property owner usually buys it. Often, the contractors will add this cost to the project budget. Be sure to agree upon who is responsible for purchasing the policy and get it before starting the project.

Here’s a list of who could buy this type of plan :

Contractors
Homeowners
Construction companies
Building owners
Developers and builders
Subcontractors

What are the types of builder's risk insurance?

Construction workers moving a large cement block

There are two main options to choose from:

For Workers : Delays, interruptions and damage to building structures are real threats. Coverage protects labour, equipment, building materials, and covers project interruption costs should it get delayed. It applies to skilled trade professionals and others involved.
For Homeowners : Insurance does not cover dwellings under construction. If damage were to occur without a builder’s risk plan in place, your claim could get denied. You would be financially responsible. Always notify your insurer of planned renovations. Ensure you have the proper coverage in place. It applies to the landowner. Get more information about home renovations and insurance before starting.

Coverage can also be divided into hard, soft, and financial loss:

Hard costs: This covers the structure and all its components. It includes equipment, materials, and fixtures.
Soft costs: This is for legal fees and engineering losses.
Financial loss: This is for losses that may occur from the loss of use of the dwelling.

How much does builder's risk insurance cost?

Premiums can vary greatly based on the work you are doing. Factors such as project scope, structure size, location, type of work, timeline, and threats are considered. The cost is also based on the type of services you offer. The overall cost, building value, development type, and history of your claims are considered.

How is builders risk insurance calculated?

The premium for a builder's risk insurance policy is determined by the total value of your structure upon completion, considering various project-specific factors. This value encompasses the combined cost of all materials and labour used in the construction, excluding the value of the land on which the structure is built.

The average cost of a policy is about 1% to 4% of the total project cost. For example, a $100,000 build would be between $1,000 and $4,000 to insure. Buildings with greater exposure to threats will be more expensive to insure.

What is wrap-up liability coverage?

Wrap-up liability is similar to commercial general liability insurance. The difference is wrap-up coverage applies to the specific building project. It covers liability for the property owner and builder.

Does builder’s risk insurance cover liability?

No, builder’s risk is a form of property coverage protecting your building, structures, and materials. It is not liability protection. You’ll need additional coverage to protect against liability threats.

What is the difference between builder’s risk and wrap-up liability insurance?

There is a stark difference between these two types of coverage. Builder’s risk covers the property, and wrap-up is the liability portion of coverage while a property is under construction. Together, they offer a wide range of protection.

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Builder's risk insurance FAQs

Is builder’s risk insurance legally required in Ontario?

You have no legal requirement to have builder’s risk coverage in Ontario. However, it may be required by banks, lenders, and other project stakeholders. It may also be required under the bylaws of some municipalities. It's a good type of protection to add to your Ontario small business insurance if you work on building projects.

How much builder's risk insurance do I need?

A builder's risk insurance estimate can help you determine the coverage you need. Generally, your policy requirements will be 1% to 4% of the total project cost.

The estimate should reflect the completed value of your structure. The value of after the work is complete. Consider all labour costs, materials, and other fees, minus the land value. The best source of this information is your budget. It will give you a good indication of how much you should get.

Is there a deductible for builders risk insurance?

Like other types of business insurance, there is usually a builders risk deductible. This amount can vary. The higher deductible you select, the lower you’ll pay in premiums.

Does builder's risk insurance include soft costs?

Hard costs, such as materials, supplies, and labour, are part of builder's risk. However, soft costs can have just as much of a financial impact. They can include accounting, developer costs, real estate taxes, consulting, and additional insurance.

These fees could add up if a loss occurred due to damage or delays. They can have a significant financial impact. Most plans do not cover soft costs outright. But you can add them as an endorsement. What is included will be specified in your policy.

How long does builder's risk insurance last?

Policies are written for the expected length of the project. They are written for terms of 3, 6, or 12 months. If the work is not completed on time, you can extend it. Usually, one extension is granted.

What is a builder's risk warranty?

This is a policy endorsement you can add to your homeowner's policy. It can enhance the warranty on materials, systems, workmanship, and structural defects. Some insurers offer coverage for up to 10 years. Speak with your insurer about your options.

What is blanket builders risk coverage?

This is a type of builders' risk that allows builders and contractors (in addition to having contractors insurance) to insure themselves for all projects they work on over a year rather than insuring each individual project. Once this coverage is in place, you are covered until the policy expires at the end of the year. This saves time on paperwork.

How do you get a builder's risk insurance estimate?

Securing builder's risk insurance involves several key steps, including getting a quote early, agreeing on coverage responsibility, estimating project details, utilizing a broker, selecting the right policy, and commencing work.

Follow these tips to get an estimate :

Get it before the work starts : You should get a quote before starting the project, or you may have issues getting it.
Agree on who will get the coverage : Determine who will get the plan (builder, property owner, etc.)
Get an estimate of build length and budget : Collect information about the project. This is used to compare quotes.
Use a broker : Our commercial insurance brokers will help you compare quotes from multiple insurers.
Choose policy : Select the option that is best suited for your project. Coverage can usually be modified to meet your needs.
Get started : Complete the work as planned.

Builder's risk insurance comparison

How is builder's risk different than commercial property insurance?

Builder's risk insurance is a short-term policy only for when your property is under construction. Commercial property insurance covers your location against common perils and loss while you are up and running. You can take out insurance to get protection while work is ongoing.

Builders risk insurance vs general liability - what’s the difference?

Builder's risk insurance is a type of property coverage that protects your building, structures, and materials during construction. General liability insurance covers liability for the property owner and builder for a specific building project (often called wrap-up liability coverage). Builder's risk protects the property itself, while general liability protects against liability threats.

Is home builders' insurance the same as builders' risk coverage?

Yes, residential home builders insurance is a type of builder's risk coverage specifically for dwellings under construction. While the names and coverage may differ slightly, they serve the same purpose.

What's the difference between a builder's risk and a homeowner's policy?

You need insurance when you are doing a renovation. Your home insurance does not cover you when it is under construction. You can take out residential builder's risk insurance to cover your dwelling while work is completed.

Protect your project with the best builder's risk insurance

Do you have a building project coming up? Have peace of mind in knowing you have protection with proper insurance. Call 1-855-550-5515 or get started online. We will work with you to find the best solution for your needs.

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Nolan Wilson

Content Marketing Manager

Nolan is a content marketing manager and writer at ThinkInsure. He has 15+ years of experience in the insurance industry, working with brokerages and direct insurers to create compelling insurance content, specializing in auto, home, and commercial.