Builders Risk Insurance  Construction of building

Builders risk, also known as a course of construction policy is a special type of insurance to protect property (building, materials, equipment) when a cannabis business is renovating, adding, or constructing a new building for their operations.

Builders risk insurance is not commercial general liability insurance.  It will be important to buy a specific liability policy to recognize the risks during the construction phase. You may obtain a password to complete our online application request for liability insurance by clicking here.

Most cannabis cultivation and manufacturing facilities will have the need to construct specialized rooms, or add new electrical, plumbing, and HVAC systems. Other circumstances might include a brand new building known as ground up construction.

Construction contract should determine the responsible party to buy the insurance

The buyer of a builders risk policy typically is the project owner. However, the construction contract may require a different party to buy the insurance such as the contractor along with determining other parties to be included on the policy such as subcontractors. In our experience, the subcontractors should be named on the builders risk policy to protect their interests if a claim was to occur, keep the project funded, and avoid issues involving subrogration by the insurance carrier. 

If the builders risk insurance is protecting the project owner exclusively and a claim occurs due to the negligence of a subcontractor, the builders risk insurance carrier is likely to seek recovery for the payments made for a claim from the subcontractors insurance carrier. This action will delay the project from being completed on a timely manner.

Determining the project value is an important component on a builders risk policy. This value is typically based on the total of all costs associated with the building and designing of the covered property, including labor, overhead and materials. Consideration should be given toward any changes to the construction value during the project cycle.

Why do you need a builders risk insurance policy?

A common mistake made by the business or project owner is using a standard building insurance policy to cover the property during construction. This may have serious consequences when certain risk exposures are potentially not covered for this type of policy.  This is a reason for buying a this type of insurance.

Types of Builders Risk Coverages:

  • Building
  • Equipment
  • Soft Costs
  • Materials in transit and at temporary locations
  • Back up of sewers, drains or sumps Debris removal
  • Fire department service charge
  • Ordinance or Law
  • Pollution clean up
  • Scaffolding re-erection Scaffolding, construction forms, etc.
  • Valuable papers

Other Types of Insurance to Consider

Be certain your general contractor and subcontractors have their own commercial liability and workers compensation insurance.  Depending on individual circumstances other insurance needed may include specific liability insurance to recognize the construction, excess liability, and workers compensation.  Please visit our insurance product menu for more details.   

If you need to buy insurance for a cannabis construction project, please visit our online password request to begin the application process.