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Scope of Builder’s Risk Coverage

What does builder’s risk insurance cover? That was the question in Pre-Eng Contracting v. Intact.

A builder repaired the roof at a school. As a result of negligent work, rain spilled through the roof onto the wooden floor of a gymnasium.

The builder had a builder’s risk policy with Northbridge and a CGL policy with Intact. Northbridge took the position that its policy did not cover damage to the floor because the roof, not the floor, was under construction.

Justice Bawden noted that the object of builder’s risk insurance is to ensure that the builder has sufficient insurance to complete the work in the event of an unforeseen failure.

After examining conflicting case law, Justice Bawden held that a builder’s risk policy does not cover an entire project site. It only covers property in the course of construction which is located at the project site.

Justice Bawden concluded that the Northbridge builder’s risk policy did not provide coverage for damage to the gym floor or damages for delay in completing the project, and that the Intact CGL policy did provide such coverage.