Builder’s risk and commercial general liability are often mentioned together, but they cover different problems. Builder’s risk protects the project itself. Commercial general liability, usually called CGL, protects you when someone claims your work caused bodily injury or property damage to others.
Most construction projects in Ontario and across Canada need both. The key is coordination, because gaps often appear when owners, general contractors, and subcontractors assume someone else’s policy will respond.
This guide explains what each policy covers, who typically carries it, common claim scenarios, and how to avoid coverage disputes.
Quick summary
Builder’s risk covers physical loss or damage to the work during construction, such as fire, theft, vandalism, and certain water damage events, subject to the policy wording.
CGL covers third party bodily injury and third party property damage claims arising from your business operations, plus defence costs, subject to the policy wording and exclusions.
Builder’s risk protects the project property. CGL protects against liability.
Why this matters on real projects
Insurance problems in construction rarely come from missing coverage entirely. They come from confusion about responsibility.
Canadian construction contracts often require contractors to coordinate with project specific builder’s risk and, on larger projects, wrap up liability programs. Contracts may also include indemnity clauses and additional insured requirements that expand your obligations beyond what you think you are buying. Completed operations exposure can remain for years after turnover, which affects how you choose limits and umbrellas.
If your contracts and policies are not aligned, claim disputes become expensive.
What builder’s risk insurance covers
Builder’s risk, also called course of construction insurance, is designed to cover physical loss or damage to the project while it is being built or renovated.
Typical builder’s risk covered losses
Coverage depends on the form, but common covered losses include:
Fire and smoke damage
Theft and vandalism
Certain water damage events
Damage to materials and work in progress
What builder’s risk is meant to insure
Builder’s risk is often used to insure:
The building under construction or renovation
Materials on site
Work in progress
Sometimes materials in transit or off site storage, if included
This is where many contractors get caught. Transit and off site storage are not always automatic. If your contract makes you responsible for materials before installation, you need to confirm the builder’s risk policy covers that stage.
Who usually buys builder’s risk
It varies by contract.
On many projects, the owner buys it.
On others, the general contractor buys it.
In some cases, a subcontractor is responsible for their own portion of work or materials.
Do not assume. Check the contract and the policy summary.
What commercial general liability insurance covers
Commercial general liability insurance protects your business when a third party alleges bodily injury or property damage caused by your operations.
Typical CGL covered losses
Common CGL claim scenarios include:
A visitor is injured on site
Your work damages third party property
Your crew causes damage to neighbouring units or common areas
A customer alleges injury from your operations
CGL also typically includes defence costs, which can be significant even when you did nothing wrong.
Completed operations and long tail exposure
CGL usually includes completed operations coverage, which applies after the project is finished, subject to exclusions and policy terms.
This matters because many construction claims show up after turnover. Water intrusion, defects, and performance allegations can appear months or years later. Limits should reflect that long tail exposure.
Builder’s risk vs CGL: real claim examples
Example 1: Fire on a renovation project
A fire damages the building and the work in progress.
Builder’s risk is designed to respond to physical damage to the project.
CGL may respond only if there is third party property damage outside the project scope or if another party alleges liability, depending on the facts.
Example 2: Theft of materials on site
Materials are stolen before installation.
Builder’s risk may respond if theft is covered and materials are included.
If materials were stored off site or in transit, coverage depends on the builder’s risk wording.
Example 3: Flooding a neighbouring unit
A plumbing mistake floods a neighbouring tenant space.
CGL is the primary policy designed for third party property damage allegations.
Builder’s risk generally focuses on the project property, not third party liability.
Example 4: Defect claim after turnover
A year after completion, the owner alleges a defect caused damage.
This is where completed operations under CGL may apply, subject to terms and exclusions.
Builder’s risk typically ends when the project is complete or occupied, depending on policy wording.
The contract clauses that create the most insurance confusion
Three contract areas drive most coverage disputes:
Wrap up liability and owner programs
Some projects use wrap up liability. Wrap up does not automatically replace your CGL. Enrollment rules and exclusions matter.
Indemnity and additional insured requirements
Hold harmless and indemnity clauses can expand your obligations. Additional insured wording must match what your policy can provide.
Permit and code compliance
Municipal permitting and building code compliance can influence disputes and timelines after a loss. Documentation often matters as much as the repair.
How to avoid gaps between builder’s risk and CGL
Use this checklist before the project starts:
Confirm who buys builder’s risk and who is named on it
Confirm when builder’s risk begins and ends, including occupancy rules
Confirm whether transit and off site storage are covered if you need them
Confirm who is responsible for deductibles after a loss
Confirm your CGL limits meet contract requirements and include completed operations
Confirm additional insured and waiver of subrogation requirements can be met
Document scope changes and keep site records in case of a dispute
Coordination matters more than labels.
Talk to Boardwalk
Boardwalk helps contractors coordinate builder’s risk and commercial general liability so projects stay protected without gaps. If you want a fast review, send your contract insurance requirements page and your current policies. We will confirm who should carry what, what to verify in the wordings, and how to set limits that match the real risk on the project.
