Who this applies to
If you are a general contractor, renovation contractor, home builder, real estate developer, or property owner managing construction in Ontario, builders risk insurance is not optional. It is the foundational coverage layer that protects a structure and the materials going into it from the moment work begins until the project reaches substantial completion. Lenders financing new construction, municipalities issuing building permits, and commercial landlords authorizing tenant improvement work all routinely require a builders risk policy before a single shovel breaks ground or a single wall comes down.
This guide is written for the decision maker who is already managing a project or preparing to tender one and needs to understand exactly what the policy covers, where the gaps are, and what Ontario underwriters will ask before they bind coverage. Whether you are overseeing a $400,000 residential addition in Mississauga, a $4 million commercial fit-out in Toronto, or a multi-phase industrial development in Hamilton, the same core principles apply. If you want to review your options right now, start at Builders Risk Insurance with Boardwalk and work from there.
Course of construction insurance: The industry term used interchangeably with builders risk insurance. It refers to a policy that covers a structure and related materials during active construction or renovation, and it expires when the project is complete or occupied.
Substantial completion: The point at which a structure is ready for its intended use, even if minor deficiencies remain. This is the moment most builders risk policies automatically cease to respond, and when the building must transition to a permanent property policy.
What is covered and not covered
Core coverage under a standard builders risk policy
A standard builders risk policy in Ontario covers the structure under construction on an all-risk basis, meaning it responds to physical loss or damage unless a cause is specifically excluded. Covered causes typically include fire, lightning, windstorm, hail, vandalism, theft of materials on-site, and sudden accidental water damage. The policy value should equal the full completed value of the project, including labour, materials, and soft costs.
Beyond the structure itself, most policies extend to cover materials and equipment stored on-site or in transit to the site, temporary structures such as formwork and scaffolding, and, with proper endorsements, soft costs like architect fees, permit reapplication costs, and additional carrying costs triggered by a covered delay.
What is not covered without specific endorsements
This is where builders risk policy coverage gaps cause real financial pain. Mechanical or electrical breakdown of equipment is almost never included in a base policy. Contractor tools and equipment require a separate inland marine or equipment floater policy. Faulty workmanship itself is excluded, though the resulting damage to surrounding materials may be covered depending on policy wording. Earthquake and flood are standard exclusions in Ontario and require separate endorsements or standalone policies, particularly relevant for sites near the Great Lakes or in areas with documented flood mapping under Conservation Ontario guidelines.
Delay in start-up coverage and loss of revenue caused by a construction setback are not automatic inclusions. Wrap-up liability for all trades on a project is a separate product and must be arranged deliberately. If your project involves design-build responsibilities, professional liability exposure for the design component is not addressed by a builders risk policy at all, which is why projects in that delivery model often need a combined placement. Boardwalk also arranges Architects and Engineers Insurance in Ontario for firms carrying design liability on construction projects.
Soft costs coverage: An endorsement that reimburses expenses such as additional interest on construction loans, reapplication fees for permits, extended equipment rentals, and marketing costs that are incurred because a covered loss delayed the project.
Inland marine floater: A separate policy that covers contractor tools, mobile equipment, and materials while in transit or temporarily stored away from a fixed location. It does not overlap with builders risk but must be coordinated with it.
Common claim scenarios for this business type
Ontario construction projects face a predictable pattern of losses that lead to the most common builders risk claims. Understanding these scenarios helps contractors and developers structure their policies correctly before a loss occurs rather than discovering gaps afterward.
Fire during framing. Wood frame residential and multi-residential construction is at peak vulnerability during the framing stage before fire suppression systems are installed. A fire that destroys a partially framed structure in Brampton or Vaughan can eliminate months of work. Builders risk responds to the replacement cost of the structure and materials, but only if the policy limit reflects the completed value, not just the cost of work done to date.
Theft of copper wire and plumbing materials. Theft of installed and staged materials remains one of the highest-frequency claims on Ontario commercial construction sites. Copper piping, electrical wire, and HVAC components are targeted. Builders risk covers theft of materials intended for installation, but only if the site security conditions in the policy are met. Many policies require active site supervision during working hours and locked perimeter access after hours.
Water damage during winter shutdowns. Projects that pause over winter in Ontario face pipe freeze risk, particularly in structures where mechanical systems are roughed in but not operational. Damage from burst pipes is covered under most policies, but some insurers impose a vacancy or shutdown clause requiring site inspections at defined intervals during any period of non-activity lasting more than 30 consecutive days.
Collapse of adjacent structure during renovation. Renovation projects on older commercial buildings in Toronto, Hamilton, or Kingston can destabilize adjacent walls or foundations. The resulting collapse of materials or structural elements is a covered loss under builders risk, but the cost of repairing the faulty work that caused the collapse is excluded. The legal liability to a third party for property damage is a commercial general liability matter, not a builders risk matter. This distinction matters at claim time. Boardwalk also arranges Commercial General Liability Insurance in Ontario to address that side of the exposure.
Cost drivers and underwriting questions insurers actually ask
Ontario underwriters pricing commercial construction insurance ask a structured set of questions before they quote. Decision makers who arrive at a broker conversation prepared for these questions move through the placement process faster and avoid mid-binding delays that can hold up project starts.
- What is the total completed project value, including all hard costs, labour, soft costs, and contingency?
- What is the construction type: wood frame, masonry, steel frame, or concrete?
- What is the occupancy class once the project is complete: residential, commercial, industrial, or mixed use?
- What is the anticipated project duration, and are there phased occupancy dates?
- Who is the general contractor, and what is their claims history and years in business?
- Is the project in a flood zone, a high wind corridor, or near a watercourse?
- What site security measures are in place: fencing, lighting, after hours monitoring?
- Are there completed value soft costs that need to be scheduled separately?
- Is the project design-build, and if so, who carries the design liability?
Wood frame construction carries higher fire risk and therefore higher premium rates than concrete or masonry. Projects near mapped flood zones in Ontario, including areas along the Grand River, Credit River, and Lake Ontario shorelines, attract additional scrutiny. Project duration matters because a 24-month project carries more seasonal exposure than a 6-month project.
How to reduce premium without reducing protection
The goal is not to buy less coverage. The goal is to demonstrate to underwriters that your project and your business practices represent a lower risk profile, which earns more competitive pricing on the same scope of protection.
- Install temporary site security cameras and a monitored alarm system to reduce theft-related loading on the premium.
- Implement a documented hot work permit program for any cutting, welding, or torch work on-site. Insurers reward formal fire prevention protocols.
- Stage material deliveries to minimize the value of materials stored on-site at any one time, reducing the maximum possible theft or damage loss.
- Use a general contractor with a demonstrable loss history and a WSIB clearance certificate in good standing. Subcontractor qualification matters to underwriters.
- Engage a project manager or site superintendent whose responsibility includes daily site walkthroughs and a written site log. This documentation becomes critical in a disputed claim.
- Choose a higher deductible on low-frequency perils such as theft if the project budget can absorb a $10,000 or $15,000 loss without disrupting cash flow. This can produce meaningful premium savings without meaningful risk transfer loss.
Contractors who maintain a positive claims history across multiple projects are treated more favorably at renewal and on new project placements. Boardwalk tracks this history across your portfolio and presents it proactively to underwriters. Learn more about the full scope of Construction Insurance in Ontario that supports contractors at every project stage.
Quick checklist
Before work begins on any Ontario construction or renovation project
- Confirm the total completed value of the project and set the builders risk limit accordingly.
- Verify whether the project requires a lender-mandated builders risk policy with the lender named as an additional insured or loss payee.
- Confirm whether the construction contract requires the owner or the general contractor to carry the builders risk policy and who is responsible for the deductible.
- Arrange soft costs coverage if the project carries significant carrying costs, permit fees, or marketing expenses tied to a completion date.
- Confirm that contractor tools and mobile equipment are covered under a separate inland marine floater and not assumed to be included in builders risk.
- Obtain certificates of insurance from all subtrades before they begin work and verify that their commercial general liability limits meet contract minimums.
- Identify whether any phase of the project will trigger a vacancy or shutdown condition and confirm the insurer's inspection requirement during that period.
- Confirm what happens to coverage at substantial completion and when the permanent property policy must be bound to avoid a gap.
Mistakes that cause coverage gaps
The most expensive builders risk mistakes in Ontario are structural, not accidental. They happen when the policy is placed without fully matching it to the contract, the lender requirements, or the actual scope of work.
Underinsuring the completed value. Insuring only the cost of work completed to date instead of the total completed project value is one of the most common and most costly mistakes. If a fire destroys a partially built structure, the policy must respond to the cost of rebuilding from the ground up, not just replacing what was lost. Underinsuring creates a coinsurance shortfall that the contractor or owner absorbs out of pocket.
Failing to notify the insurer of material changes. Adding a floor, changing the construction type from masonry to wood frame, extending the project duration by more than 90 days, or adding a new principal contractor are all material changes that require insurer notification. Failing to report them can void coverage at the worst possible moment.
Assuming subtrades carry their own builders risk. Subtrades carry their own liability and tools coverage, but they do not carry builders risk for the project. Only one builders risk policy covers the structure, and the contract should specify who places it. Confusion on this point leads to gaps and disputes after a loss.
Letting the policy expire before occupancy is confirmed. Builders risk policies have a defined expiry, typically tied to the projected completion date. If the project runs long, the policy must be extended before it expires. An expired policy on an unoccupied structure under construction leaves the project with no coverage at all, and standard commercial property policies will not respond to a structure that is not complete and occupied.
Missing the transition to permanent property coverage. At substantial completion, builders risk ends and a permanent commercial property policy must begin. This handoff is often mismanaged, creating a gap of days or weeks during which the building is uninsured. For landlords and developers holding commercial real estate after completion, Commercial Property Insurance in Ontario must be in place before that transition point.
FAQ
Is builders risk insurance required by law in Ontario?
It is not mandated by provincial statute, but it is effectively mandatory in practice. Construction lenders require it as a condition of financing, construction contracts typically require it as a condition of the contract, and municipal building permits increasingly require evidence of coverage before inspections proceed.
Who buys the builders risk policy, the owner or the contractor?
Either party can be the named insured, and the construction contract should specify who is responsible. On large commercial projects, the owner typically buys the policy and names the general contractor as an additional insured. On smaller residential renovations, the general contractor often places the policy. The contract language controls this, and it should be confirmed before work begins, not after a loss.
Does a homeowner's policy cover a major renovation?
Standard homeowner policies contain vacancy and construction exclusions that can suspend coverage once a renovation reaches a certain scale or the home becomes unoccupied. Renovation projects involving structural changes, additions, or new construction require a separate course of construction policy. Boardwalk has a dedicated tool to help clarify this distinction at the Builder Risk vs. Home Insurance Renovation Checker.
What happens to coverage if the project is delayed?
Most policies are written for a specific term tied to the expected completion date. If the project is delayed, the policy must be extended before its expiry date. Insurers will typically agree to an extension if there has been no claim and the risk has not materially changed, though the premium will be prorated for the additional period. Failing to extend before expiry creates a gap that cannot be backdated.
Does builders risk cover subcontractor negligence?
Builders risk covers physical loss or damage to the structure regardless of which trade caused it, with the exception of the exclusion for faulty workmanship itself. If a subcontractor makes an error that results in water damage to surrounding materials, the resulting damage may be covered even though the repair of the faulty work is not. The subcontractor's own liability for their negligence is addressed through their commercial general liability policy, not the builders risk policy.
Can I get builders risk coverage for a renovation on a tenant improvement project?
Yes. Tenant improvement projects are a common use case for builders risk in Ontario. The policy typically covers the leasehold improvements being installed. The landlord and the lender should both be notified and may need to be named on the policy depending on the lease terms. The existing building itself should remain covered under the landlord's commercial property policy, making coordination between the two policies important.
How does builders risk interact with commercial general liability?
Builders risk covers damage to the project itself. Commercial general liability covers bodily injury or property damage to third parties caused by the construction operations. They address completely different exposures and both are required on any active construction project. A certificate of insurance for a construction project typically needs to show both coverages, along with the limits required by the contract.
What does Boardwalk need to quote builders risk for my Ontario project?
Boardwalk needs the total project value, the construction type, the project address, the start and end dates, the name of the general contractor, information about site security, and a copy of the construction contract or the lender's insurance requirements if applicable. Projects with unusual features such as design-build delivery, phased occupancy, or flood zone locations may require additional information before a market submission can be prepared.
Request a quote or book a meeting
Boardwalk Insurance works with Ontario contractors, developers, and property owners who need builders risk coverage placed accurately and on a timeline that matches their project start. Whether you are responding to a lender requirement, fulfilling a contract condition, or replacing coverage that no longer fits the scope of your project, the Boardwalk team is ready to review your situation and present options from markets that specialize in construction project insurance in Ontario. Reach the team directly at Get a Commercial Insurance Quote or visit the Boardwalk Contact page to book a meeting at a time that works for your schedule.
What we need from you
- The total completed project value including hard costs, labour, soft costs, and contingency reserve.
- The project address, construction type, and anticipated start and end dates.
- The name and contact information for the general contractor and any known principal subtrades.
- A copy of the construction contract, lender commitment letter, or building permit application showing any insurance requirements.
- A description of site security measures in place or planned before construction begins.
- Whether phased occupancy is anticipated and the dates for each phase if known.
- Any prior claims on construction projects in the past five years, including the nature of the loss and the amount paid.
