Whether you’re developing new commercial properties or renovating existing properties, access to builder’s risk insurance is essential to protecting your projects during construction. Yet, like most segments of the insurance industry, the builder’s risk market is experiencing great volatility. By understanding the state of the market, you’ll know what to expect if you need a builder’s risk policy over the next year.
Market Conditions Are Creating Headwinds
In the US and globally, the builder’s risk market has begun to harden much like the insurance industry overall. Commercial projects are under greater scrutiny by underwriters, who have a lower appetite for writing these policies and are less inclined to be flexible on coverages and terms.
The factors fueling this shift are similar to the issues plaguing the economy in general. The escalating cost of construction labor and materials, coupled with tight supply for both, is driving up project costs and lengthening timelines. That scenario increases a project’s risk, making insurers less likely to provide a policy or more likely to increase premiums while limiting coverage. Though many of these challenges were fueled by the pandemic, it will take years for the construction market to stabilize and for the pendulum to swing back.
Adding to the inflationary pressures, skilled labor shortage, and supply chain problem is the fact that natural disasters like hurricanes and wildfires are happening more frequently. Not only is insurance tougher to obtain in markets that sustained significant damage recently, like Florida, California, and other western states; these incidents create a ripple effect, making insurers more selective in writing builder’s risk policies nationwide. The higher their claims volume, the more reluctant they are to write new policies in any market.
What to Expect if You Need Builder’s Risk Coverage
Given that every commercial construction project is unique—running the gamut from renovations to existing properties up to large-scale vacant land developments—there are no set rules for how the current market might impact your project. But there are several likely scenarios to prepare for if you’re planning new commercial work.
Considerations to Keep in Mind
With premiums on the rise and capacity limited, it can be challenging to obtain builder’s risk insurance with favorable terms and conditions. When your project is already facing escalating costs and longer timelines, you don’t want to struggle to find the right coverage.
By paying attention to the following considerations for obtaining builder’s risk insurance, you can streamline the process and ensure your project is sufficiently covered:
How B. F. Saul Insurance Can Help
Given the current state of the builder’s risk insurance market and the considerations that are critical to ensuring your project is protected, it is more important than ever to have an experienced advisor by your side. That is why many commercial project owners and builders partner with B. F. Saul Insurance.
The commercial insurance experts at B. F. Saul recognize that each commercial project is unique. From a museum undertaking a major renovation to a developer embarking on a habitational property project from the ground up, our team has worked with countless property owners and builders to ensure their projects are adequately covered.
Our commercial insurance team brings its deep expertise to every project, leveraging decades of experience nationwide, including the most challenging markets. We dig deep to understand your risks, find the best options, and negotiate terms and conditions for you. Best of all, we help make the process as seamless and efficient as possible.
If you have a commercial construction project on the horizon, contact B. F. Saul Insurance early to ensure you obtain the right coverage on the right timeline.