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Building construction insurance is a type of property insurance specifically designed to cover property during the course of construction, including renovation and repair. Typically, it is purchased by either the property owner or contractor. Course of construction insurance is needed because most commercial property policies will exclude or null and void coverage if major renovations or construction to the building is above a certain threshold and not fully/properly disclosed to the incumbent property insurance company.
There are additional risks and responsibilities inherent in this type of work that a typical property policy is not designed or priced to cover. All parties that have property involved in the project should be named in the building construction insurance policy. This may include the owner, contractor, subcontractors, the financial institution funding the project and, in some cases, the architects and engineers too.
When purchasing course of construction insurance, one of the issues often overlooked is the policy period. Course of construction insurance policies provide coverage for property during the period of construction, renovation or repair.
But, at what point does construction renovation or repair actually begin?
Typically, contracts require that building construction insurance be provided for the duration of the contract period
The lender may specify the inception date
Be sure to review the building construction insurance policy provisions to determine whether there are restrictions on when coverage begins
In addition, determining when course of construction coverage terminates can be equally problematic. Building construction insurance policies can contain provisions that terminate coverage prior to policy expiration.
The provisions typically state that course of construction insurance will end at the earliest of the following:
Careful planning is the foundation for a smooth construction project, which includes the right course of construction insurance throughout the building period.
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