When do I need construction insurance in Ontario?

Construction can be a long process, especially for those who pre-purchased a home and are waiting for it to be built. During house construction projects, you should be prepared with construction insurance 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.

Fortunately, construction insurance protects you against risks, and variations of this insurance will cover you from all angles. You owe it to your family to protect their safety and your home, right?


What is construction insurance?

Also known as builder’s risk insurance, construction insurance in Ontario is designed to cover homes that are under construction, protecting the project from direct damage. It covers you against things such as weather events that could affect your home during the project, such as strong winds blowing down a frame or a storm damaging the electrical system while it’s being installed. Natural disasters do happen.



During your home’s construction, it’s easy to assume that the contractor’s insurance policy will cover everything. However, even though contractors’ plans may include their own property and equipment, it may not necessarily cover your property in the making. It wouldn’t cover your home contents if you’ve tried to move them onto the property a little early, either.

Always double-check!

Any equipment or material being stored on your property before installation is not covered until becoming a part of your home (when you move it to your new home and start living in it). By purchasing construction insurance in Ontario, you would include the value of such materials in your policy, protecting them against theft or damage until the regular home insurance policy takes over.

You’ll still need to purchase builder’s risk insurance coverage, even though contractors have coverage of their own. That’s because you and the contractor need to cover different risks for different insurable interests. They have insurance to replace their tools and to cover the costs of potential litigation. Homeowners want to insure the cost to rebuild homes that are damaged before being completed.

While determining who has an insurable interest, it’s wise to call your insurance broker to ascertain how much coverage is needed. Insurance companies weigh things like the project’s construction schedule as well as the project’s estimated cost when establishing how much coverage you need.


Why is construction insurance important in Ontario?

Considering the risks involved in everyday construction, it’s a necessity to protect you against personal liability. It’s essential that you have liability insurance on your land as well, as some mishaps, whether physical or involving building aspects, don’t fall under the builder’s 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. Whether you’re building a new addition, fixing the garage, or finishing your basement, you’ll want coverage for the full value should any losses occur. It’s not as simple as adding the cost of work done onto your existing policy either. Your homeowner’s policy won’t offer you the extra coverage range necessary to cover construction-related losses on its own.

For lenders, it is required that a construction insurance policy in Ontario covers the loan amount or the cost to build your home that was specified on the appraisal. Banks will not finance your home unless you have this coverage.


Get in touch with aha insurance and have your home covered with all-around home insurance to protect your present or future home. Get your quote now!

Seriously, what else can you do in 3 minutes?

Boil half an egg?

You might like this stuff, too.

Writing off cars: how it works and why it’s not good

Writing off cars: how it works and why it’s not good

Getting into a car accident is traumatic enough, but then in the aftermath you have to deal with tow trucks, insurance claims, temporary transportation, potential demerit points, and whether or not the car is a write off. It can all be a bit overwhelming.  Depending...

read more
Insurance premiums explained (in plain English)

Insurance premiums explained (in plain English)

We get a lot of questions about insurance premiums and how they work. Unfortunately, the insurance industry is overflowing with jargon, complex policies, and conditional answers—to the point where it’s just hard to navigate. We’re on a bit of a mission to turn that...

read more