Explaining Two Types of Project Protection Insurance Coverage for Contractors and Owners


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.

Insurance Brokerage Serving the Greater Toronto Area (GTA) for Over 30 Years

Commitment to our clients is to provide:

  • Right insurance program.
  • Right insurance company.
  • Right price.
  • Recommend practical loss prevention measures.
  • Guide and assist you during claims3 settlement process.
Powered by RWARDZ