Having a new home built is exciting, but it can also be a little stressful for the new homeowners. Many concerns run through their heads such as what if there is a delay or what happens if a mistake is made in the design. What few think about is what happens if a mishap occurs where there is no insurance in place to take care of it.
What Kind of Home Insurance Do I Buy For My New Home Build?
There are three types of insurance that are applicable to new home builds.
Builders Risk Insurance
This form of insurance is sometimes called Course of Instruction Insurance.
If you borrowed the money to finance the new home build, then the lender of the money may demand that insurance is put in place to cover this. Otherwise, the lender is at risk if something goes wrong during the build that damages or destroys the property. Almost every bank that is financing a new home build will insist on the builder’s risk insurance. They will also expect there to be enough insurance to cover what the home is valued at or the amount of the loan.
What Does this Type of Insurance Cover?
It covers the most common risks that a new home build may be exposed to such as;
- Wind Damage
Some insurance companies may offer additional coverage besides this which is all risk insurance.
What It Does Not Cover
In general, it will not cover;
- Liability ( Professional builders should have their own liability insurance in place)
Who Has to Buy This Insurance?
If professional builders are building the new home, they have their own various types of Insurance Coverage. But, they will only be responsible for purchasing the builder’s risk insurance if the house and property is in their name. For example, for builders who construct new building projects but sell the homes during the building stage.
If the homeowner owns the property and is having the home built in their name, then they are responsible for the builder’s risk insurance.
General Liability Insurance
This type of insurance provides protection for third party claims. The builder will have their own liability insurance. But, the owner of the home is responsible for third parties; therefore, they should have liability insurance to cover the possibility of a claim.
It is very important that the homeowner clearly establish who is responsible for the liability insurance. An accident could occur because of some careless act of the builder. But, ultimately the person whose name is showing as the registered owner is going to be liable.
The builder should have workman’s compensation coverage in place. But, if you have hired the builders, then you should ask them to confirm that they do have this coverage in place.
Insurance Companies in Canada Providing Builders Risk Insurance
1. Excalibur Insurance
This is an insurance Company that provides the builder’s risk insurance for new home builds in many parts of Ontario.
- This company will only provide this type of insurance for those new builds that have not been started as yet.
- They will not insurance new builds that have been covered under other insurance policies.
- The type of insurance provided is all risk insurance.
- Coverage can also include damage or theft of building supplies and materials
- The policy is written for the property/homeowner
- The building contractor can also be added to the policy
- The insurance available is coverage for the full value of the project.
- There may be another option for this type of insurance through Inland Marine.
2. Mitchel Whale Builders Risk Insurance
This is another insurance provider in Ontario that offers Builders Risk Insurance.
The coverage includes;
In the event of these mishaps additional coverage is in place for;
- Value of building materials
- Debris removal
- Damage or loss of property
- Soft cost
3. Hero Insurance
Hero Insurance offers a builders risk insurance policy that covers;
As well as the additional costs as those outline for the Mitchell Whales Insurance coverage.
Additional Insurance Companies offering Builders Risk Insurance
4. Aligned Insurance
5. Toronto Insurance
6. Brokers Trust Insurance
7. April Canada
8. All Risks Insurance
9. Newman Insurance
10. Fenn & Fenn Insurance
11. CSIB Insurance
12. Acumen Insurance
13. Bevan Insurance
At What Point Do I Need to Insure My New Home Build?
This type of insurance may not be mandatory, but it certainly provides peace of mind in knowing that you have insurance in place for any potential mishaps. Ones that could be extremely costly if there were no insurance in place to help cover the costs.
What are the Odds of a Mishap to a New Home Build?
The odds of something going wrong with a new home build that could possibly be covered by insurance is greater than what you may think. Here are just a few examples;
August 18, 207
lfpress.com reported a massive fire that destroyed two homes under construction
570news.com reports an incident of five new homes that were under construction that were fully framed and braced were wind completely destroyed.
June 6, 2018
calgary.ctvnews reported Cochrane townhouse burned to the ground which was under construction
How Much Does Builders Risk Insurance Cost?
Like any insurance, it is all going to depend on the circumstances and the specific insurance company. Some reports showed that there can be a difference in the price for a wood frame and concrete home builds. Indicating the cost of the insurance is higher for wood-framed homes compared to concrete. This is based on the greater risk of fire for wood framed homes. If a fire occurs during construction, there is a much greater risk of total loss. Whereas with concrete the risk is minimized to a partial loss.
Shop Around for Builders Risk Insurance
The best way to obtain builders risk insurance is to shop for it as diligently as you should for any type of insurance. This means getting insurance quotes where a comparison can be made.