Construction Insurance - Contractors & Builders

1. What is construction insurance?

Construction insurance refers to a group of coverages designed specifically for businesses operating in the construction industry. It protects against risks related to job sites, operations, equipment, and legal liability.

Unlike standard commercial insurance, construction insurance takes into account the temporary nature of projects, the involvement of multiple parties (contractors, subcontractors, professionals), and the higher level of risk associated with construction work.

It helps secure:

• Ongoing construction projects
• Contractual obligations
• Legal liabilities
• Business continuity in case of a loss

2. What insurance coverages are essential for a construction business?

A construction business typically requires a combination of coverages to ensure proper protection.

The most important include:

• Commercial General Liability (CGL): covers bodily injury, property damage, and third-party claims.
• Builder’s Risk Insurance: protects the project under construction against risks such as fire, theft, or weather damage.
• Wrap-Up Liability Insurance: provides liability coverage for all parties involved in a project under a single policy.
• Equipment and Machinery Insurance: covers tools, heavy equipment, and machinery used on job sites.
• Surety Bonds: guarantee contractual obligations (bid, performance, and payment bonds).

These coverages are often required by contract, especially for large or public projects.

3. What is builder’s risk insurance?

Builder’s risk insurance, also known as course of construction insurance, covers physical damage to a project while it is under construction.

It typically protects:

• The structure being built
• Materials on-site or in transit
• Temporary installations and structures
• Losses caused by fire, theft, vandalism, or certain weather events

This type of insurance is critical to ensure that a loss does not halt the project due to a lack of funds to rebuild or repair damages.

4. What is the difference between builder’s risk insurance and liability insurance?

These two coverages are complementary but serve different purposes.

Builder’s risk insurance covers damage to the construction project itself (for example, a fire damaging a structure under construction).

Liability insurance covers damage or injury caused to third parties (for example, a passerby injured near a job site or damage to a neighbouring property).

Both are typically required to ensure full protection on a construction project.

5. Are surety bonds required in construction?

Yes, surety bonds are very common in the construction industry, especially for public contracts and large-scale projects.

They are used to guarantee:

• That the contractor will honour their bid
• That the work will be completed as agreed
• That subcontractors and suppliers will be paid

Surety bonds protect the project owner rather than the contractor and are often mandatory to qualify for certain contracts.

6. How much does construction insurance cost?

The cost of construction insurance depends on several factors related to the business and the type of work performed.

Insurers typically assess:

• Type of projects (residential, commercial, industrial)
• Annual revenue
• Business experience
• Number of employees
• Claims history
• Project size and value

Higher-risk or more complex projects generally lead to higher premiums. A strong track record and good risk management practices can help reduce costs.

7. Who needs construction insurance?

Any business operating in the construction sector should have appropriate insurance coverage.

This includes:

• General contractors
• Subcontractors (electricians, plumbers, roofers, etc.)
• Real estate developers
• Renovation companies
• Skilled trades professionals

Even smaller businesses and independent contractors face significant risks, particularly in the event of a liability claim or property damage.

8. Is construction insurance mandatory in Quebec?

Some types of coverage are not legally required, but they are often mandatory in practice due to contractual obligations.

For example:

• Liability insurance is almost always required
• Builder’s risk insurance may be required for certain projects
• Surety bonds are commonly required for public contracts

In reality, it is very difficult to operate in the construction industry without proper insurance coverage.

9. Why use ClicAssure?

• Quickly compare multiple specialized insurers
• Access solutions tailored to Quebec construction businesses
• Simple and efficient process
• Get connected with qualified insurance partners

ClicAssure acts as a comparison platform and connects you with insurers specialized in construction insurance.