The Expert Podcast

• Construction and development costs continue to rise for many reasons, including insurance.
• Previous episodes have covered rising building supplies costs, supply chain issues, lumber prices, and labor prices.
• Insurance is a major expense for general contractors and builders, covering various types such as:
  • General liability insurance
  • E&O (Errors and Omissions) insurance
  • Bonding (required in most states for general contractors)
  • Builders risk insurance, which covers damage to structures and materials during construction.
• Inflation and rising material costs are causing insurance companies to increase premiums across these coverages.
• Insurance policies now reflect higher replacement and reconstruction costs, even if the original job was less expensive.
• Builders can expect increases in premiums for:
  • Builder’s policies
  • General contractor license bonds
  • General liability (GL) policies
  • Workers’ compensation insurance
• Higher premiums increase fixed expenses that contractors must spread over future projects.
• Specific policies like builder’s risk or inland marine (covering materials) are seeing significant premium hikes due to increased replacement costs.
• Liability expenses are also rising because of higher litigation and damage-related costs.
• Some builders are being non-renewed as insurance carriers limit coverage or withdraw from the market.
• Builders are also considering adding cyber liability insurance to protect against tech-related risks such as:
  • Online building plans
  • Email systems
  • Risks of cyberattacks that could halt construction projects.
• Builders are encouraged to start shopping for insurance quotes earlier than usual.
• Possible ways to manage rising premiums include:
  • Increasing deductibles
  • Adding umbrella policies for broader protection
• Consult your insurance agents or brokers to find the best coverage options.
• The insurance market for builders is evolving with more restrictions, higher costs, and added exclusions.
• We invite you to share your thoughts and experiences in the comments.