It can take a while to build a house, especially if you have pre-purchased it and are still waiting for it. Construction insurance is essential for house-building projects in Ontario. Things like accidents on-site or weather events can present unforeseen risks and damage while your house is being worked on, but standard home insurance won’t cover homes that aren’t inhabited.
Construction insurance covers you for all risks. Variations of this insurance are available to you. Your family owes it to you to ensure their safety and that of your home.
What is construction insurance?
Construction insurance is also known as builder’s risk insurance. It protects the home from direct damage. This insurance covers you for weather-related events, such as strong winds that blow down a frame or storms that damage the electrical system as it is being installed. Natural disasters do happen.
It’s easy to assume the contractor’s policy will cover all costs associated with your home’s construction. Contractors’ plans may cover their equipment and property, but they might not cover you. It wouldn’t cover your home contents if you’ve tried to move them onto the property a little early, either.
Always double-check!
You are not responsible for any equipment or materials that you have stored on your property prior to installation. This applies only when it becomes part of your home, which is when it starts living in your new home. You can purchase construction insurance in Ontario to protect such items from theft and damage until your regular home insurance takes over.
Even though contractors already have insurance, you will still need to buy builder’s liability insurance. This is because the contractor and you need to protect different interests from different risks. They also have insurance to cover potential lawsuits and replace their tools. Homeowners want to insure the cost to rebuild homes that are damaged before being completed.
It’s a good idea to contact your broker to determine how much coverage you need. When determining how much coverage you require, insurance companies consider factors such as the construction schedule and the estimated cost.
Why is Ontario construction insurance so important?
Considering the risks involved in everyday construction, it’s a necessity to protect you against personal liability. You should also have liability insurance for your land, since any mishaps that may occur, regardless of whether they are physical or building-related, do not fall under the builders’ coverage.
If your renovation is a considerably large one, it may end up affecting your home insurance coverage because the replacement value tends to increase once renovations are completed. You will need coverage to cover any loss, regardless of whether you are adding a room, repairing a garage, or finishing your basement. This is not as easy as simply adding the cost to your existing policy. Your homeowner’s insurance won’t provide you with the additional coverage necessary to cover the construction-related loss.
Lenders will require that you have an Ontario construction insurance policy that covers the loan amount and the cost of building your home. This coverage is required by banks to finance your home.