From Blueprint to Reality: Protecting Construction Projects with COC Insurance

Nov 2024

In Canada, the construction industry is booming, with billions of dollars invested annually in new projects. According to the Canadian Construction Association, the industry contributes over $141 billion to the economy each year. With such significant investments, having COC insurance is not just a good idea—it’s a necessity.  

Indeed, the Canadian construction sector is a cornerstone of the nation’s economy, contributing significantly to its growth and development. In February 2023 alone, total investment in building construction in Canada was worth $20.6 billion [1]. With over 1.5 million people employed in the industry, the construction sector’s impact is both vast and vital [2]. As the industry continues to expand, the role of insurance brokers becomes increasingly crucial in ensuring that clients’ projects are well-protected against unforeseen risks. 

In this guide, we will delve into the essentials of Builder’s Risk insurance, also known as Course-of-Construction (COC) insurance. By understanding the intricacies of COC insurance, brokers can better inform and protect their clients, ensuring that their investments are safeguarded throughout the construction process.
 

What is Course of Construction (COC) Insurance? 

Course of Construction (COC) insurance is a specialized type of property insurance designed to protect buildings under construction. It covers the structure, materials, and equipment against various perils such as fire, theft, and vandalism. Think of it as a comprehensive safety net for your client’s project, ensuring that unexpected events don’t derail their progress.
 

How Does Course of Construction Insurance Differ from Builder’s Risk Insurance? 

COC insurance and Builder’s Risk insurance are essentially the same, with the terms used interchangeably. The minor differences in terminology often depend on regional or industry-specific usage. As a broker, it’s crucial to clarify this for your clients, so they understand that both terms refer to the same type of coverage.
 

How Does COC Insurance Work? 

COC insurance works by covering buildings or projects against repair or reconstruction costs during construction. It typically includes coverage for building materials, fixtures, and appliances. For instance, if a fire breaks out halfway through a project, COC insurance steps in to cover the repair costs, allowing the project to continue without major financial setbacks.
 

Who Purchases Course of Construction Insurance? 

Typical purchasers of COC insurance include property developers, contractors, and project owners. The responsibility for purchasing the insurance is often specified in the construction contract. As a broker, you should advise your clients to review their contracts carefully to determine who is responsible for obtaining this essential coverage.
 

When Does a Company Need COC Insurance? 

Companies need COC insurance to cover damage to the property being constructed  Lenders often require this insurance to protect their investments during the construction phase. If your client is taking out a loan for their project, ensure they understand that COC insurance will likely be a requirement.
 

Why Does a Contractor or Business Need COC Insurance? 

COC insurance is vital for protecting against significant financial losses and liability claims. It safeguards construction projects from unforeseen risks and accidents. Emphasize to your clients the peace of mind that comes with knowing their project is protected, allowing them to focus on completing the work without worrying about potential financial setbacks.
 

What is Covered by a COC Insurance Policy? 

COC insurance policies typically cover a range of perils, including fire, theft, vandalism, and natural disasters. Here are two scenarios where having COC insurance would be advisable:

Scenario 1: A contractor is building a new commercial office space. Midway through the project, a fire breaks out, causing significant damage. COC insurance would cover the repair costs, ensuring the project can continue without major financial setbacks.

Scenario 2: A developer is constructing a new residential housing complex. During the framing stage, a severe storm causes extensive wind and water damage to the structures. Builder’s risk insurance would cover the repair costs, allowing the project to proceed without major financial losses.

About SWG Construct 

At SWG, we specialize in providing tailored commercial insurance solutions for the construction industry. Our team of experts understands the unique risks associated with construction projects and offers comprehensive coverage to protect your clients’ investments. Whether they’re building a new commercial or residential space, SWG Construct has them covered. Learn more about it here. 

In the world of construction, unexpected events can derail even the best-laid plans. That’s why having Course-of-Construction insurance is crucial. It provides the financial protection your clients need to keep their projects on track, no matter what comes their way. So, don’t wait—get the coverage they need and build with confidence!
 

Ready to protect your clients’ construction projects with the best insurance coverage? Reach out to SWG’s underwriting team for more information about SWG Construct. We’re experts at specialized and tailored commercial insurance solutions, and we’re here to help you every step of the way.
 

Sources :
1. Statistics Canada 

  1. Made in CA