What to Watch for in Builder’s Risk Insurance


The construction landscape has transformed over the last couple of years, including for new builds and renovations. Here are things to consider when placing Builder’s Risk insurance for your clients.

Requests for Policy Period Extensions

We are seeing an industry boom in the commercial construction space as demand for new industrial facilities, structural renovations, commercial space conversions, rehabilitation work, cannabis build-outs, multi-family properties, and advanced-technology manufacturing spaces is soaring. At the same time, supply chain disruptions that began during the pandemic continue to plague the industry. While many contractors have been stocking up on materials (see below), high demand for new builds, conversions, and renovations, along with shipping delays, have resulted in insureds requesting that the policy period on a Builder’s Risk policy be extended. Typically, Builder’s Risk policies are issued for the originally anticipated length of the project, but if and when delays occur, insureds can find themselves struggling to extend the coverage to the new end date.

Seneca Insurance Company provides customized Builder’s Risk policies to address a client’s needs. We will review the specific details of each project to determine how we can best accommodate a client’s request for an extension. We also will consider mid-term projects when insureds are unable to obtain an extension from their current carrier.

The Cost of Construction Is Higher

In today’s inflationary environment and tight labor market characterized by higher wages, costs should be fixed as soon as the project price is determined (binding subcontractors, pre-ordering materials and storage, etc.) to ensure the client has adequate limits on the Builder’s Risk policy. If construction costs do increase during the project, Seneca Insurance is able to offer Excess coverage that sits on top of the policy limits insureds already have in place.

Materials Located at a Temporary Storage Facility

In order to have materials on hand and to keep prices reasonably steady, construction companies have been ordering materials such as lumber, doors, and windows in much greater quantities in advance. If they are utilizing additional temporary storage to keep these materials on hand, speak to clients about obtaining additional Property coverage. While Builder’s Risk extensions cover materials and supplies in a temporary off-site storage facility as well as during transportation to and from the storage facility to the on-site property, a standard extension only applies to the materials being used for the project.

A Continued Focus on Loss Control

Certain high-risk construction operations (street and road and large frame construction) will continue to incur higher insurance costs. Contractors with more difficult risk profiles, poor loss experience, or ineffective risk management protocols will continue to face a challenging market. Contractors should continually work on enhancing their loss control and risk management programs to minimize claims and improve their risk profiles. 

Seneca Insurance can provide you with Builder’s Risk solutions for your clients. We also offer policies to cover all phases of a project – from course of construction to vacant property to occupied – in addition to the broadest renovation appetite in the market.

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