Starting a construction project in Ontario is exciting. Whether you’re building a new home, a rental property, or renovating, you want to protect your investment. That usually means purchasing a builder’s risk policy. But here’s something many property owners don’t realize: while a builder’s risk policy protects the structure itself, it does not automatically protect you from lawsuits if someone gets hurt on the site.
That’s where premises liability comes in.
In this article, we’ll break down what premises liability is, how it works within a builder’s risk policy, and why it’s a smart addition to your insurance strategy. We’ll also explain how this type of coverage is handled under home insurance in Canada, and what you need to know to stay protected.
Builder’s Risk vs Premises Liability: What’s the Difference?
A builder’s risk policy insures the building under construction and the materials used to build it. This typically covers:
- Fire
- Theft of building materials
- Storm damage
- Vandalism
In short: builder’s risk protects the building.
Premises liability is different. It protects you, the property owner, if someone is injured or their property is damaged while on or near your construction site. This coverage includes:
- Bodily injury liability – for example, if someone trips, falls, and requires medical care
- Property damage liability – if someone’s belongings or vehicle are damaged due to the site
- Legal defence and fees – including lawyer costs and court expenses
Think of it this way: builder’s risk protects your investment, while premises liability protects your financial well-being from lawsuits.
Why Premises Liability Matters in Ontario
Even if your construction site looks quiet, the risks are real. Delivery drivers, neighbours, or even children could access the site, sometimes despite fences or warning signs. If an accident happens, you as the property owner could be held responsible.
Under Ontario law, liability often falls on the property owner because the incident happened on your land, regardless of whether you were physically present. That means even if you’ve hired a general contractor to manage everything, your name can still end up on the lawsuit.
And lawsuits are expensive. Medical bills, lost wages, and pain and suffering claims can reach hundreds of thousands of dollars. Without premises liability, you could be paying those costs out of pocket. With it, your insurance takes care of both the defence and potential settlement.
A Realistic Example
Picture this:
- A contractor leaves tools and lumber scattered on-site.
- A neighbour’s child slips, trips over a beam, and breaks their leg.
- The family sues for medical costs, lost income, and pain and suffering.
Even though you didn’t cause the injury, you could still be held legally responsible as the owner of the property. Premises liability coverage would step in to defend you in court and cover the associated costs.
But Isn’t the Contractor Responsible?
This is one of the biggest misconceptions. Many owners assume that because the contractor is doing the work, they bear all the responsibility.
The truth is: liability can fall on both parties. Injured individuals (or their lawyers) will often include everyone connected with the property in a lawsuit: the builder, subcontractors, and the property owner. If your name is on the land title, you are a potential target.
Having your own premises liability protection ensures that you’re not relying solely on your contractor’s policy.
How Premises Liability Connects to Home Insurance
Premises liability isn’t just for large commercial builds. It can also apply to personal projects like building a new home, adding a second unit, or renovating a cottage.
In Canada, home insurance and house insurance policies for completed properties often include liability protection for accidents that happen in or around the home. But during construction, those standard policies don’t always apply. That’s why adding premises liability to your builder’s risk policy fills the gap.
If you already have home insurance in Ontario, it’s important to let your broker know about the construction project. In some cases, your existing coverage can be adjusted. In other cases, a standalone builder’s risk and premises liability package is the better option.
Levitt’s Recommendation
At Levitt, we’ve helped families and businesses across Ontario secure the right coverage for their construction projects. Based on our experience, we strongly recommend including premises liability whenever you take out a builder’s risk policy.
The benefits are clear:
- It safeguards your finances from lawsuits
- It gives you peace of mind during construction
It keeps your project on track without unexpected legal costs
And because we work with leading house insurance companies, we can compare your options and find the most competitive rates.
Key Takeaways
- A builder’s risk policy protects the building and materials during construction.
- Premises liability in Ontario protects you from lawsuits if someone is injured or property is damaged on your site.
- Both coverages are important, because liability can fall on the property owner even when contractors are doing the work.
- The cost of premises liability is low compared to the potential cost of a lawsuit.
- Brokers like Levitt help you find the right coverage from trusted insurers at the best possible rate.
Building a home or property is stressful enough without worrying about lawsuits. Premises liability is a smart, affordable way to protect yourself while construction is underway.
Don’t leave your project and your finances at risk.
request a quote book a meetingYes
No
Somewhat