Do I Need “Course Of Construction” Insurance?

During the process of building your home, there’s a lot happening. You might have subcontractors working for you, you will have a great deal of money tied up on materials, and there is almost always something that goes wrong – or at least not to plan. For these reasons, and in light of the immense complexity of the home building process, it’s recommended to always have course of construction insurance.

Course of construction insurance basically covers the materials and parties involved in the home building enterprise. The project owner (you), architects, lenders, general and sub-contractors, as well as the actual materials the house is being constructed out of all usually fall under the coverage of such insurance.

It protects these parties and assets, generally, against all the things normal homeowners insurance might protect against: fire damage, earthquakes, floods, windstorms, etc. Most forms provide what is referred to as “broad form” coverage which insures the buyer from the above-mentioned incidents both on site as well as in transit or off-site, say, in storage.

Some of these parties may already have their own insurance (especially the architects and contractors). However, to avoid gaps in the insurance - to make sure there is an umbrella that securely covers every facet of the construction - the rule of thumb is for one party to have course of construction insurance that covers all of the interested parties.

Who buys the course of construction insurance, from whom, and for how much is all usually outlined contractually before construction begins if you’re using outside parties. If not, make sure you’ve purchased it and that it is in place before you begin construction. The forms and rates that accompany your policy are generally run through the state insurance regulators.

Course of construction insurance (also referred to as builder’s risk insurance) is obtainable through an insurance broker. You may talk to whichever insurance company you currently use for your other insurance policies. If you’d rather find a new company, talk to friends and family about their companies and what they like about them. Most major companies can offer this type of insurance, and it’s important to shop around and know your options before committing to one.