How Do You Insure a New Build?

Ontario boasts the fastest-growing house market in all of Canada. On average, it costs around $240 per square foot to build your own house as a self-build or roughly between $250-$300 per square foot to hire someone else to custom build your home for you. For growing families, this can be the ideal option as you can customize your home as much as you’d like. Extra rooms for new additions, a larger living room, a master suite, an additional garage… you can let your dreams run wild.

But how do you insure a building under construction? It’s not the same as your average home insurance. There are increased risks, potential liability exposure, and contractors will be working on your home. What does one do to keep your biggest investment (in progress) safe?

Enter “New Build Insurance,” or Builder’s Risk Insurance. Ontario families who are looking to purchase a new home or build a home from scratch may need to be informed about the process to insure a work-in-progress building, what companies offer coverage for new builds, what insurance their contractors should have, and so forth. Excalibur is here to lay it out for you and your family to better understand insuring your new build.

What is New Build Insurance in Ontario?

To acquire new build insurance in Ontario, your best bet is to talk to an experienced insurance broker who can help you receive quotes from multiple insurance companies at competitive rates. Not every insurance company will offer builder’s risk or new build insurance in Ontario, which is why it’s integral for you and your family to work through a broker who can give you an expert’s insight.

For those of you who are building homes from scratch in Ontario, new build insurance is critical. Some homes will be covered by a 10-year manufacturer’s warranty that may cover some issues related to building work that is carried out by the developer, but it won’t cover every instance, your liability, and it may not cover damages caused by the contractors operating on your new home. Moreover, if you’ve purchased your new build with a mortgage, odds are that your lender will need you to have some form of new build insurance.

What exactly is new build insurance/builder’s risk? This insurance coverage is designed to provide comprehensive protection for losses and property damage during the construction period. Builder’s risk/new build insurance is purchased by the homeowner and provides coverage for losses like collisions due to aircraft or vehicle, lightning, hail, theft, explosions, etc. A typical home insurance policy may cover these perils, but not if the building is under construction.

Even a brand-new home is vulnerable to risks. A new home under construction may not be occupied and is therefore exposed to things like theft, water damage, fire, etc. Builder’s risk, or “new build home insurance,” protects Ontario families with an added layer of coverage that you need for you and your loved ones’ peace of mind. You may also wish to conduct a professional home inspection of your new property before you move in.

How Do You Insure a New Build?

You can purchase new build insurance in Ontario through a variety of home insurance companies, but note that not every single one will offer this unique type of coverage. Banks may also offer certain coverage options, but you will receive only one price option. Alternatively, you can purchase your new build insurance in Ontario through a brokerage like Excalibur Insurance Group. We have access to top-rated insurance carriers who can provide you with numerous options for new build coverage. New build home insurance in Ontario is not the same as regular home insurance and may cost a different amount. On average, you’ll find that the cost of a policy like this can range anywhere between 1% to 4% of the total construction budget, depending on the various risk factors. I.e., estimated rebuild cost, location of building/construction site, size, finishes and materials, and nearby hazards will all affect the cost.

Note that builder’s risk insurance/new build insurance can be purchased by the following parties:

• The owner of the new property/the family wanting the home built
• Architects and designers
• General contractors
• Subcontractors
• Lenders

If you are any of the above and looking to purchase new build insurance in Ontario, consult with Excalibur Insurance. We’re happy to get you started on a comprehensive policy that will secure your new build against potential losses, ensuring that you and your family can move into your new digs without a hitch.

When you need home insurance after construction is complete may vary as well, so don’t hesitate to give us a call and ask if you are unsure when to purchase.

What Doesn’t New Build Insurance in Ontario Cover?

Your builder’s risk insurance will typically exclude the home’s contents (as there shouldn’t necessarily be any personal possessions at the site of a build while a home is still being constructed) and will not include any coverage for your contractor’s general liability or damages they cause. This is because your contractor is expected to carry their own insurance. Be cautious when hiring a contractor to work on your family’s new build/new construction, as not every contractor is created equally. You should look for a company or individual that is sufficiently insured and registered, with good reviews and a solid business history. This is your new family home, after all!

Excalibur Insurance can’t wait for you to move into your new home with your family, but you’ll have to ensure that your asset is adequately protected first. Consult with our brokers on acquiring coverage and ask us if you have any further questions regarding this specialized coverage for new builds.