Construction sites are inherently risky. Beyond the dangers that come with operating heavy machinery, construction businesses face a myriad of other challenges. For example, what happens if a trespasser steals expensive tools or a client sues you for an error made on a project?
Without insurance, construction companies could be on the hook for these costs. But with construction all risk insurance, they will have peace of mind knowing they are protected should something go wrong. Learn more about construction all risk insurance, and how BrokerLink can help you find a policy below.
What is construction all risk insurance?
Construction all risk insurance is a specialized insurance policy that was designed with contractors, subcontractors, and construction companies in mind. Specifically, this type of insurance offers comprehensive protection against losses or damages relating to a construction project, equipment and machinery, and claims of third party property damage or bodily injury in connection with the building under construction or the execution of the project.
Construction all risk insurance policies can benefit the investor of a project or the contractors engaged in the project. The name “all risk” comes from the fact that it intends to cover every possible risk faced by the policyholder, with the expectation of any risks intentionally excluded in the policy.
Ultimately, the purpose of construction all risk insurance is to provide peace of mind around the major risks that construction companies face. When you purchase this type of insurance, you can be safeguarded against everything from legal liability and property damage to theft and vandalism.
What does construction all risk insurance cover?
Construction all risk insurance is designed to be as comprehensive as can be. Therefore, your insurance policy will include a wide variety of coverages, protecting your contractors from the financial ramifications of start-up delays, lawsuits, and accidents resulting in environmental pollution.
Though the protection your policy provides will ultimately depend on the specific coverage types and limits you choose, the most common coverages included in construction all risk insurance policies are as follows:
Third party liability insurance
Third party liability insurance, sometimes referred to as commercial general liability insurance, will protect you against claims made by third parties alleging property damage or bodily injury. For example, if an injury or fatality takes place on your construction site, you could be sued. But third party liability insurance will help cover the cost of the lawsuit, including defence costs, settlement fees, and any other fees, such as medical expenses.
Commercial property insurance
Commercial or business property insurance can help protect the physical location out of which you run your business. For example, if your contractor’s office was damaged in a fire, your insurance company would help pay for the costs of repairing the space thanks to commercial property coverage.
Contract works coverage
Contract works coverage is a form of property insurance that safeguards the structures and materials associated with a project should they be damaged.
Professional fees coverage
Professional fees coverage is a type of construction all risk insurance coverage that reimburses the policyholder for the cost of professional consultants, like architects or surveyors, if they must be hired to rectify the damage.
Environmental liability insurance
If during your construction project, you have an accident that results in environmental pollution, you could be left with a huge bill. Examples of environmental pollution are any accident that pollutes land, air, or water, or causes harm to natural resources or biodiversity. In such an instance, environmental liability insurance can help cover the clean-up costs.
Latent defects coverage
Latent defects coverage might be added to construction all risk insurance policies to protect contractors against damage caused by defective design or workmanship. This type of coverage is specifically for damage that is discovered after the project is complete. In fact, this coverage can be claimed up to 12 years after the project’s completion and covers the costs of remedial work.
Professional liability and errors and omissions coverage
As a construction company, you are hired by clients to complete an agreed-upon project. But what happens if you make a mistake and fail to deliver the service as promised, or you omit important information that negatively impacts the client? You could be sued. But if you include professional liability insurance with your construction all risk insurance coverage, your insurance company will help pay for the cost of a lawsuit.
Start-up delay coverage
If damage to works and structures delays the project’s start-up or completion, a start-up delay clause can cover the cost of any lost revenue. This type of coverage is sometimes referred to as “advanced loss in profits insurance.”
How much does construction all risk insurance cost?
The cost of construction all risk insurance depends on several factors and ultimately varies from customer to customer, provider to provider. The main reason for this is that each provider offers its own unique coverage types, and each customer gets to decide which coverages to include in their policies.
As a general rule of thumb, the more coverage you include with your policy and the higher the coverage limits, the more expensive your policy will be. In addition, the lower your deductible, the more expensive the policy. Beyond coverage options, limits, and policy deductibles, insurance companies consider many factors when calculating premiums.
A few of the most common factors used to determine the cost of construction all risk insurance are as follows:
- Your construction company's physical location (if applicable): If your construction company has a physical office space or location, the size and region in which your office is situated will be considered. Construction offices in areas with higher crime rates may pay more for construction all risk insurance.
- Your construction company’s size: Insurance companies will consider the size of your construction company, including the number of people you employ, your average monthly income and annual revenue, and the amount of equipment you own.
- Your construction company’s claims history. Insurance providers in Canada will examine your claims history when calculating your premium. Fewer claims may result in a less expensive policy.
- The industry of your construction business: If you work in an industry that is especially dangerous (for example, if you often work with flammable or toxic substances or your work involves heights or dangerous machinery), you might be deemed “high risk” and have higher premiums as a result.
Is it mandatory to have construction all risk insurance?
Construction all risk insurance is not federally mandated in Canada, but it might be compulsory in some jurisdictions. Anytime construction insurance is mandated, the construction company must ensure that they purchase comprehensive construction insurance that protects them as well as their subcontractors.
Even if construction all risk insurance isn’t mandatory where you live, it is still wise to invest it in owing to the benefits it offers. Plus, construction all risk insurance is well-suited to construction companies in a wide range of fields, including roofing, plumbing, pest control, tree removal, demolition, snow removal, electrical, junk removal, HVAC, interior design, and carpentry companies.
Contact BrokerLink for a free construction all risk insurance quote
Do you want to learn more about construction all risk insurance? BrokerLink can help!
Our insurance advisors have helped thousands of construction companies and contractors find quality insurance. No matter the size, revenue, location, or industry of your construction company, BrokerLink can find the right coverage for you.
Contact us by phone, send us an email, or visit us in person at one of our many locations throughout Canada, and one of our expert insurance advisors will be pleased to assist you.
We also invite you to take advantage of our free insurance quotes. You can request a free quote on the phone, in person, or online using our digital quote tool.
Get the protection you deserve with construction all risk insurance. Contact BrokerLink to get started today.