In recent years, the construction
output in most Canadian cities has been steadily rising. The Canadian
housing market continues to defy expectations, which means there are a
number of unfinished projects to be completed in the near future. When it comes
to completing a construction project, contractors and project owners have
unique coverage concerns that need to be addressed as the project moves from
start to finish. For contractors and project owners, managing risks are a major
part of any successful project. Project protection insurance coverage is
available for both contractors and project owners and is typically required in
building construction and renovation, as well as hefty civil projects.
Types of Project Specific Insurance
Policies
There are two main types of project-specific insurance policies:
(1) Builders
Risk,
(2) Wrap-Up
Coverage.
Over the course of a project, the value of the completed work and materials
used can begin to mount quickly. At any time, a loss of work and/or material
could cause serious financial harm to both the contractor and the project
owner.
Builder’s Risk Insurance
Also called "Course of Construction Insurance”, Builder’s Risk insurance is
designed to indemnify the owner and contractors for their investment in labour
and materials in a project during the course of its construction. It is a
special type of property insurance that protects a person’s or organization’s insurable
interest in materials, fixtures, and/or equipment being used in the
construction or renovation of a building or structure should those items
sustain physical loss or damage from a covered cause. Even the most
meticulously planned construction projects can be derailed by unforeseen events
and delays. It is important for contractors and project owners to protect
themselves from the physical loss or damage of materials and labour during the
course of construction.
Project owners and builders should determine who is going to arrange for Builder’s
Risk coverage. While a builder’s risk policy is often thought to be
all-encompassing, this is not generally the case. Since some mishaps will not
fall under a Builder’s Risk insurance policy, it is also important for project
owners to have sufficient liability insurance coverage.
Wrap-Up Insurance Coverage
Wrap-Up liability coverage is a separate insurance policy altogether that
covers everyone that steps foot on a construction site. Often used for more
expensive or high profile construction projects, wrap-up insurance is a project
specific type of insurance that serves as an all-encompassing policy that
protects all participants working on a given project, while covering every
potential risk or liability posed by the project.
There are two kinds of wrap-up insurance coverage:
(1) Owner-controlled insurance program (OCIP),
(2) Contractor-controlled insurance program (CCIP).
The owner-controlled insurance program is set up by the owner of the project
for the benefit of the general contractor and all listed subcontractors that
will be working on a particular project. On the other hand, the general
contractor can use a contractor-controlled insurance program to extend coverage
to all contractors and subcontractors signed up to work on a project.
No
matter the size of the project, it is vital for project owners and contractors
to have the right project protection insurance coverage. Make sure you are
covered and have piece of mind that your insurance policy will cover any
unforeseen circumstance.