Understanding Course of Construction (COC) Insurance

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If you’re a swimming pool contractor and your project is put on hold for any unforeseen reason, you could stand to lose a significant amount of money.

Pools under construction are open to a multitude of risks. Anything can happen at any time, and this is where a course of construction policy comes in. A COC policy can provide compensation if you’re faced with a financial loss due to a project that is damaged mid-construction.

What is Covered Under the Insurance Policy?

In general, a course of construction policy helps you with any physical items involved in the building of a construction project such as materials, supplies, equipment in transport, half-built gazebos, and onsite equipment. This can include power tools, cement, tiles, aggregate and more.

What is not Covered Under a Course of Construction policy?

A standard COC policy does not include coverage for:

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

While there might be instances of exclusions to the insurance policy, some items have limited coverage under a COC policy, so it’s wise to ask your agent about any additional offerings that might help fill the gaps left by a limited coverage form.

Who Purchases the Insurance?

Either the homeowner, project owner or the contractor can purchase COC coverage but for residential construction, it is often easier for a contractor to purchase coverage through a reporting form type policy. Many require it by contract and factor it into the cost of the bid. The value of the project should be the construction cost, including labor, profit and of course materials.

General Liability and Course of Construction Insurance

General liability and COC Insurance are not the same. COC is a type of commercial property insurance that is designed to cover physical assets that is related to construction work while a general liability covers property damages and bodily injuries that a third party might suffer.

For a COC example – say you’re leading a swimming pool construction project and you find that the bobcat left on site was stolen overnight. In this scenario, you need to file a claim on your COC policy to cover the cost of replacing the missing equipment. In fact, many policies would also cover the cost of renting/leasing replacement equipment to finish the job.

For a Liability example – say that the homeowner enters the construction site after hours to get their own look into the progress. It’s late in the day, sun is going down and they make a wrong step injuring their ankle in some hard pan dirt. General liability insurance can cover the injured party’s medical bills and protect your business in case of a lawsuit.

Who is Covered Under a Course of Construction policy?

Since this insurance helps hasten a project’s delay and covers unexpected expenses, it’s useful for anyone that has a financial interest on a project’s completion to be covered under a builder’s risk policy.

To learn more about builder’s risk insurance and safeguard what you’ve built, contact us to today.