Course of construction insurance is a specialized policy used by contractors, project owners, developers, and subcontractors to cover a structure under construction. Course of construction insurance—also known as builders risk insurance—is a short-term commercial property policy that covers the property until your work is complete.
What Does Course of Construction Insurance Cover?
Course of construction insurance is designed to protect your financial interest in a construction project in the event of a covered event, such as:
- Weather events
Here are some ways this contractor insurance policy covers.
Theft and Vandalism
A group of young adults and teens decided that a partially constructed residential home in their neighborhood would be the perfect place for a parent-free party. Fueled by alcohol, one of the partygoers kicked giant holes into the freshly sheetrocked walls, quickly escalating the situation from unauthorized trespassing to illegal vandalism.
Unfortunately, construction sites can be a common target for vandals and thieves.
And the occasional group of teens making poor decisions.
Fortunately for the developer and contractors in this real-life example, a course of construction policy was in place to pay for repairs and replacing materials. (Even more fortunately, the property-destroying party-goers were caught by the local law enforcement.)
Course of construction insurance can help cover your investment in materials, supplies, and labor while you clean up the mess and get back on schedule.
Cleaning up an unexpected disaster—whether from vandalism, fire, or extreme weather—can put a dent in your profit margin.
Course of construction coverage usually covers your clean-up costs, including:
- Demolition expenses
- Clearing away debris
- Fire or water damage clean-up
It's hard enough to start from square one when your hard work is undone. But paying out of pocket for the privilege of cleaning up someone else's mess just adds insult to injury.
Materials, Tools, Supplies, and Equipment
Your course of construction coverage will typically cover more than just the structure you're working on; it's also designed to insure the materials, tools, supplies, and equipment stored on-site, as well.
It's not uncommon to leave materials, supplies, and equipment at a project site overnight, especially if your site is securely locked.
But no amount of security cameras, locks, or fencing can stand in the way if a fire breaks out nearby and spreads to your project site.
Course of construction will usually cover materials, equipment, and even temporary structures. Your investments in materials and equipment are covered: from construction forms and scaffolding to Bobcats and blueprints.
There's nothing more frustrating than starting over on completed work. Unless, that is, you're paying out of pocket for demolition, clearing damaged sections of the structure, making repairs, and rebuilding.
Course of construction is meant to cover work in progress and the work you've finished while the project is still ongoing.
Let's say you're working on a multi-family new construction project. An electrical fire breaks out, severely damaging two of the five units. Course of construction coverage should cover the cost of clean-up, replacement materials, and rebuilding.
What Course of Construction Doesn't Cover
Typically, course of construction coverage is an "all-peril" policy, which means it covers just about any situation except those named as an exception.
Some of the most common exceptions to a course of construction policy include:
- Flood damage
- Intentional damage
- War and nuclear damage
Note: be sure you understand the terms of your policy. While it's common to write this policy on an all-peril basis, some course of construction policies are written on a named peril basis. That means they only cover the perils mentioned in the policy, which are often fire, vandalism, and theft. Talk to your construction insurance specialist about which type of coverage is best for your project.
Lastly, course of construction is not intended to be a catch-all policy. It will not replace a general liability policy or workers' comp coverage, and will not cover situations such as:
- Employee injuries
- Third-party injuries
- Third-party property damage
- Professional negligence
Protect Your Next Project with Course of Construction Insurance
Protect your next project with a short-term course of construction insurance policy. Let the construction insurance specialists at Aegis Insurance Markets find you the right coverage to cover you from the time the first plans are drawn until the final walk-through is completed. Headquartered in Truckee, CA, we specialize in finding you top-rated contractor insurance coverage at affordable premiums.
Request a quote today or learn more about contractor insurance.