What is course of construction insurance?

What is course of construction insurance?

Course of construction insurance, also known as builders risk insurance or construction all-risk insurance, is a specialized type of insurance that provides coverage for property under construction or renovation. It protects the project owner, general contractor, and subcontractors against potential losses and damages that may occur during the construction period.

Course of construction insurance primarily covers physical loss or damage to the insured property caused by various perils, including fire, theft, vandalism, lightning, windstorm, and certain natural disasters. It typically includes coverage for the building structure itself, as well as materials, equipment, and fixtures on-site or in transit to the construction site.

This type of insurance is crucial for construction projects as it safeguards the investment and helps manage potential risks and uncertainties associated with the construction process. It provides financial protection against unforeseen events that could lead to delays, additional expenses, or even project abandonment.

FAQs

1. Does course of construction insurance cover accidents involving workers?

No, course of construction insurance does not typically cover accidents or injuries to workers. That is typically covered by workers’ compensation insurance.

2. Can course of construction insurance cover design errors or faulty workmanship?

No, course of construction insurance does not typically cover design errors, faulty workmanship, or poor construction quality. Those aspects are usually addressed through professional liability insurance or warranties provided by contractors.

3. Does course of construction insurance cover theft of tools belonging to subcontractors?

Yes, course of construction insurance typically covers theft of tools and equipment owned by subcontractors or suppliers.

4. Will course of construction insurance cover damages caused by earthquakes?

It depends on the policy. Some course of construction insurance policies include coverage for earthquake damage, while others may require additional endorsements or separate earthquake insurance.

5. Is it necessary for project owners to have course of construction insurance?

While it may not be mandatory in all cases, having course of construction insurance is highly recommended for project owners to protect their investment and mitigate potential risks.

6. Can course of construction insurance be purchased by subcontractors?

Yes, subcontractors involved in a construction project can purchase course of construction insurance to protect their own materials, equipments, and liabilities.

7. Is water damage covered by course of construction insurance?

Yes, course of construction insurance typically covers water damage caused by accidental events such as burst pipes or roof leaks.

8. Does course of construction insurance cover loss of income due to project delays?

No, course of construction insurance does not cover loss of income or financial losses resulting from project delays. Those aspects are usually covered by delay in start-up (DSU) insurance, if purchased separately.

9. Can course of construction insurance be transferred to a new owner if the property is sold during construction?

No, course of construction insurance is not transferable to a new owner if the property is sold. The new owner would need to obtain a new insurance policy.

10. Are damages caused by acts of war covered under course of construction insurance?

No, damages caused by acts of war or warlike actions are typically excluded from course of construction insurance coverage. Separate terrorism insurance may be required, depending on the location.

11. Does course of construction insurance cover damages due to faulty construction materials?

Yes, course of construction insurance can cover damages caused by faulty construction materials, such as defective wiring or plumbing.

12. Can course of construction insurance cover the costs of finding alternative accommodation for displaced tenants during renovation?

No, course of construction insurance typically does not cover the costs of finding alternative accommodation for displaced tenants. That would be addressed by the property owner’s general liability insurance or relocation expenses.

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