Construction all risk insurance. A complete guide

Construction all risk insurance

As suggested by its name, construction all risk insurance is an insurance policy that covers "all risks." These risks are normally associated with the hazards and incidents that might arise during the course of a construction project.

Commonly issued under the joint names of a contractor and the client, or a business and its customer, all risk insurances usually include various coverages in one policy. Moreover, two specific types of insurance are combined in an all risk policy.

We will cover everything you should know about construction all risk insurance, which is also known as builders risk insurance and course of construction insurance (COC).

Read our guide to learn more about builders risk insurance, who requires this type of policy, and when it is commonly used.

Whatever your insurance needs, our reputable insurance company can help you answer any questions. You can find our full details and advice for receiving quotes at the end of this article.

Table of contents:

What is construction all risk insurance?
Who needs construction all risk insurance?
What does construction all risk insurance cover?
Construction all risk insurance requirements.
Construction all risk insurance cost.

What is construction all risk insurance?

Simply put, construction all risk insurance is a type of construction insurance.

Construction all risks insurance is a specialized insurance policy that provides coverage for the two primary types of risks on construction projects: third-party injury and property damage.

Damage to property can include but is not limited to, damages caused during renovation, the improper construction of structures, accidental mistakes when erecting structures, and damage to temporary on-site structures.

Third parties including subcontractors or guests may also become injured while working at a construction site. All risks insurance covers these hazards.

Moreover, course of construction insurance bridges the gap between these two types of common risks associated with the trade into a common policy.

Usually, third-party injury and property damage insurance coverages are separate. Construction all risk insurance is designed to combine the two into one comprehensive package.

Who needs construction all risk insurance?

Businesses and organizations involved in construction may choose to take out construction all risk insurance, such as land development firms, property developers, owners of projects under construction, building contractors, and local authorities.

Typically, both employer and contractor take out all risk insurance policies. In some cases, other parties have the option of being named to the policy.

The aim of an all risk insurance policy is to ensure those parties are covered on a project. The insurance protection covers the insured, regardless of the types of damages caused to the property or who caused it.

What does construction all risk insurance cover?

As noted, construction all risk insurance is usually referred to as builders risk insurance, or course of construction (COC) insurance. You will see these names used interchangeably, however, each insurance policy's details and the types of coverage of each will differ between the insurers offering them.

With that said, generally speaking, construction all risk insurance is an insurance coverage type specifically for structures and buildings while they are in the process of being built.

While these structures are under construction, all risk insurance covers the possible damages that might arise, whereas other policies such as commercial property insurance typically do not cover structures during construction.

Builders risk insurance and all risk policies usually have different options to cover the following types of properties:

Building materials.
Foundations in construction.
Fencing, paving and outdoor fixtures.
Lawns and gardens.
Scaffolding and temporary structures.

When it comes to all risk, builders insurance or COC (course of construction), whatever name it's going by, insurance providers generally cover these common types of construction projects:

Residential remodeling (ex. replacing windows).
New residential construction and builds.
Constructing commercial property.
Building model homes and its contents.

If your construction project or the type of structure you are working on isn't listed here, you may find insurers that can offer an insurance policy as unique as your project.

Across the board, builders risk policies protect against certain types of damages.

The most basic all risk policies will cover damages caused by extreme weather events, accidental fires, and vandalism.

However, damages from volcanoes or earthquakes will generally not be covered, unless specific coverage for those types of incidents is added to the insurance policy.

Most insurance providers also specify exclusions that protect them from covering certain damages that occur from policyholder negligence or under specific conditions.

In contrast to that, most insurers will offer premium coverage options that extend coverage limits and insurable events, for example. But with higher premiums comes higher costs, however, these can be ideally suited to some policyholder's needs.

Construction all risk insurance requirements

Those who work directly with homeowners or small business owners usually won't be required to have insurance for the projects they take on.

However, large-scale projects almost always require contractors and businesses to carry insurance coverage. Large construction projects will usually require proof of builders risk insurance before hiring you.

As a rule of thumb, all risk insurance can be seen as a requirement for your business due to the benefits it provides outweigh the cons.

While all risk insurance may not be required by the law, you are usually required to have insurance from your employer as you could be held personally liable for a mistake on the job.

Key takeaways

Construction all risks insurance is a specialized type of policy that combines coverage for third-party injury claims and property damage: the two primary types of risks on construction projects.

Third parties including subcontractors or guests may become injured while working at a construction site. All risks insurance covers these hazards.

Builders' risk insurance covers damage costs while a building or structure is still under construction. For example, the damage caused by fire, vandalism and weather events.

While other business insurance construction policies protect against claims surrounding equipment and people, most won't cover unfinished structures and buildings.

Builder's risk policies ensure that your business won’t pay for damage expenses before your work is even completed.

With COC insurance, you have peace of mind that both third-party injury claims and property damages will be covered, in one comprehensive policy. However, you can choose to add on another coverage should you need additional protection.

If you're considering choosing builders risk insurance for your business, you need to understand what affects the costs of insurance to know your options.

Construction all risk insurance cost

The cost of builders risk insurance varies from business to business, due to numerous factors.

In addition, all risk policies may cover different types of situations if premium coverages are added. All of these factors combined will influence the cost of a policy.

Factors that affect construction all risk insurance costs

Even though all risk insurance policies are customizable and can vary in what they cover, they are usually influenced by the same factors, which are:

Location of the project.
Size of the business or project.
Coverage limits and deductibles.
The credit history of the business and insured.
Business or contractor's level of experience.

In summary, these factors estimate the costs of losses and the risks associated with insuring you, your project, or your business.

Construction all risk insurance quotes

When considering construction all risk insurance for your business, we recommend receiving quotes to know your options.

The process will be easy and hassle-free with the following. All can provide simple quotations while offering a high level of service.

Construction All Risk Insurance USA

For companies registered in USA you can receive quotation from Next Insurance.

Construction All Risk Insurance UK

For companies registered in UK you can receive quotation from Simply Business.

Construction All Risk Insurance Cyprus

For companies registered in Cyprus you can receive quotation from Pitsas Insurance by completing the quotation.

Our team of insurance experts can help you secure builders risk insurance while working with your financial budget. We have 35 years of experience in our field and pride ourselves on a level of high service.

Pitsas Insurances

Pafos, Cyprus

04.11.2022