Course Of Construction (COC) Insurance Explained for 2025

Managing a commercial construction or renovation project is a complex endeavor—one that involves overseeing materials, labor, timelines, and budgets. An essential component of successful project management is Builder’s Risk Insurance, also referred to as Course of Construction (COC) Insurance. In today’s evolving construction climate, these policies are critical for reducing the financial risks that inevitably arise in construction, whether it’s a home renovation, large-scale pool installation, or commercial development.

This guide traces back to the California Pool Association, which advocates for best practices in pool construction and renovation across the state. Whether you are installing a new in-ground pool for a resort or undertaking a major remodel of a commercial facility, understanding how Builder’s Risk Insurance works can help ensure your project proceeds smoothly.

Why Is Builder’s Risk Insurance Critical for Your Project?

From fire and theft to accidental damages and vandalism, construction sites face a range of potential perils. Builder’s Risk Insurance provides a safety net that covers these unforeseen events, allowing the project to continue with minimal disruption.

Recent data from the National Association of Insurance Commissioners (NAIC, 2024) confirms the vital role this coverage plays in construction-related risk management. In many cases, lenders won’t release funds without proof of a COC policy, highlighting the financial protection it offers to property owners, contractors, subcontractors, and other stakeholders.

Builder’s Risk Insurance vs. Course of Construction Insurance

Often used interchangeably, Builder’s Risk Insurance and Course of Construction Insurance both protect buildings under construction or renovation. The policy typically covers:

• The structure itself (including partially completed work)
• Construction materials and equipment (onsite, in transit, or stored offsite)
• Additional costs like architectural or engineering fees if a project is delayed
• Certain soft costs stemming from construction interruptions

According to the Insurance Information Institute (III, 2024), it is crucial to understand your policy’s terms. Coverage typically extends until the project concludes or reaches a specified milestone (e.g., when a certificate of occupancy is issued).

The Importance of Course of Construction Insurance

1. Mitigating Financial Losses

Builder’s Risk or COC insurance protects the builder or property owner from having to pay out of pocket for unexpected damages, such as a theft of materials or weather-related incidents that can delay progress.

2. Protecting Stakeholders’ Investments

Lenders often require this coverage. If the project experiences a significant setback (e.g., a severe storm causes structural damage), a COC policy ensures that funds are available to rebuild without derailing budgets or timelines.

3. Streamlining the Project

Construction delays can lead to higher labor costs, re-permitting, and additional fees from architects or engineers. With COC coverage, these expenses can be offset, giving you peace of mind that the project can move forward efficiently.

How Can Builder’s Risk Coverage Benefit Your Business?

COC Insurance is tailored to the construction industry. Unlike typical property insurance, which generally covers only finished structures, Builder’s Risk policies protect projects from groundbreaking to completion. This includes:

• Coverage of materials in transit, which is critical for large-scale projects or specialty items shipped from overseas.
• Protection against vandalism and theft, safeguarding valuable materials like copper wiring, tiles, concrete, or even specialized pool equipment.
• Potential reimbursement for soft costs (e.g., permits, professional fees) if construction delays result in additional expenses.

Securing Builder’s Risk or Course of Construction Insurance Affordably

In 2024, industry estimates placed the average cost of Builder’s Risk Insurance at around $134 per month. However, this figure can fluctuate based on:

• Project value (larger, more complex builds often require higher coverage)
• Location (areas prone to natural disasters may see higher premiums)
• Duration (the longer the construction timeline, the higher the risk exposure)
• Deductible chosen (a higher deductible can reduce premium costs but increases out-of-pocket expenses in the event of a claim)

A recent report by Construction Coverage (2024) corroborates these averages, noting that contractors and property owners should carefully assess their project’s unique risks when shopping for a policy.

What Does Course of Construction Insurance Typically Cover?

A standard COC policy helps cover physical items and materials directly involved in the building of a construction project. This may include:

• Materials, supplies, and onsite equipment (e.g., cement, aggregate, lumber, power tools, and even partially completed structures like gazebos or pool frameworks)
• In-transit materials, ensuring that if construction supplies are damaged or stolen on the way to the site, there is recourse for financial recovery

Commonly Covered Perils

1. Fire
2. Wind (may be limited in coastal areas)
3. Theft
4. Lightning
5. Hail
6. Explosion
7. Vandalism
8. Damage by Vehicles/Aircraft

Coverage can vary by insurer or policy type, so it’s essential to review your policy’s limitations and exclusions.

What is not Covered Under a Course of Construction policy?

Typical exclusions include:

• Earthquake
• Flood
• Testing of electrical systems
• Faulty design (professional negligence)
• Normal wear and tear (rust, corrosion)
• Mechanical/equipment breakdown
• Employee theft

Some insurers offer endorsements or riders that can broaden your policy, adding coverage for floods, earthquakes, or even professional liability. Discuss these options with your insurance agent to address any gaps.

Understanding the Limitations and Exclusions of Builder’s Risk Insurance

It’s important to recognize what is not covered under a standard COC policy, such as damages from earthquakes, floods, or faulty design. Some risks might only have limited coverage, so discussing additional coverage options with your insurance agent can be beneficial.

Who Should Purchase Course of Construction Insurance?

While property owners sometimes take out a COC policy directly, contractors often include the cost in their project bids. This arrangement ensures that all financial aspects of the project—materials, labor, and even anticipated profit—are protected under the policy. For pool builders—such as those affiliated with the California Pool Association—including COC coverage in project estimates is a common best practice to maintain clarity for clients and secure the investment from day one.

General Liability vs. Course of Construction Insurance

General Liability Insurance and Builder’s Risk Insurance are complementary but distinct:

• General Liability Insurance covers third-party property damage and bodily injury claims. If a visitor or homeowner is injured onsite, this policy covers their medical expenses and potential legal claims.
• Course of Construction Insurance addresses damage to the construction project itself, including materials, supplies, and partially completed work.

Given the broad scope of risks in construction, both coverages are typically recommended for comprehensive protection.

New Considerations and Trends (2025 and Beyond)

As of 2025, the construction sector has seen evolving risks, including:

1. Climate Change Impacts
   • More frequent extreme weather events, such as wildfires or hurricanes, can significantly elevate risk. Some insurers now offer specialized riders for weather-related disasters.
2. Supply Chain Constraints
   • Global supply chain disruptions may increase the cost and timeline of projects, underscoring the importance of having coverage for soft costs and materials in transit.
3. Local Regulatory Changes
   • In California, new seismic standards and environmental regulations can impact building projects. Always check with local governing bodies or associations like the California Pool Association for updates.

Ensuring your Builder’s Risk Insurance policy accounts for these emerging trends is vital for maintaining the financial health of your project.

Builder’s Risk Insurance is an essential component of any construction project, offering comprehensive protection against a wide range of risks and facilitating smooth project completion. For more detailed information or to secure a policy tailored to your project’s needs, consider reaching out to the California Pool Association or a similar organization in your region.

 

Sources, Citations, and Outbound Links

1. California Pool Association
   • California Pool Association – A resource for best practices, regulatory updates, and insurance guidance specific to pool construction projects in California.
2. National Association of Insurance Commissioners (NAIC, 2024)
   • NAIC – Consumer Insurance Insights – Provides guidelines, consumer education, and official reports on various insurance products, including Builder’s Risk Insurance.
3. Insurance Information Institute (III, 2024)
   • Insurance Information Institute – Offers comprehensive data and explanations on Builder’s Risk Insurance coverage specifics.
4. Construction Coverage (2024)
   • Construction Coverage – Builder’s Risk Insurance – Industry analysis and cost statistics, including average monthly premiums and policy recommendations.
5. California Department of Insurance
   • California Department of Insurance – Official information on state-specific regulations for commercial insurance policies, including those for construction projects.
6. American Institute of Architects (AIA)
   • American Institute of Architects – Insight into architectural standards and how design considerations can interact with insurance needs.
7. Federal Emergency Management Agency (FEMA)
   • FEMA Flood Insurance – Provides flood-risk maps and guidelines for supplemental insurance coverage, especially useful for properties in flood-prone areas.
8. United States Geological Survey (USGS)
   • USGS Earthquake Hazards – Up-to-date seismic activity data, crucial for those seeking additional coverage for earthquake-related risks.