Does Your Commercial Builders’ Insurance Match Today’s Risks?

Commercial Builders' Insurance and Today's Risks

Factors impacting the commercial building industrySpring may seem like an odd time to turn your business attention to commercial builders’ insurance, but as warmer weather begins to creep in, more construction projects are set to get underway. And despite some improvement in the post-pandemic economy, contractor risks remain high. While experts report that the overall U.S. economy is bouncing back from the pandemic, some industries continue to struggle. The construction industry is one of them, as labor shortages, supply chain disruptions, and inflated material costs continue to disrupt business-as-usual.

As the uncertainty continues, it may seem difficult to stop and perform a thorough risk management evaluation. For the nation’s construction businesses, however, there is really no better time than the present. Here are some of the key insurance policy review questions your construction business should be asking right now.

Are Your Commercial Builders’ Insurance Policies Sufficient?

Perhaps understandably, many businesses haven’t been thinking about their commercial builders’ insurance portfolio in the midst of the pandemic. It’s hard to sweat the details when you’re desperately trying to keep your business afloat. Nonetheless, the pandemic has only served to increase contractor risk, thus necessitating increased contractor risk management efforts. Consider the following factors that could impact your company’s financial and insurance needs:

  • Inflation: As material costs increase, so do contractor liability risks. A simple structure that cost $20,000 to build in 2019 might cost $50,000 to replace today. So, if your commercial builders’ liability policies are still at 2019 levels, you may end up having to cover a good portion of liability costs out of pocket.
  • Supply chain disruption: Everyone in the construction industry is well aware of the supply chain risks that have plagued builders since the onset of the pandemic. The fact that the pandemic is global only serves to make matters worse, as materials ordered from overseas have been delayed along with everything else. This, in turn, has caused massive contractor delays and, in many instances, massive construction delay damages. Contractors that fail to keep their business disruption policies current may find themselves paying a disproportionate percentage of those damages on their own.
  • Cash flow disruption: Supply chain problems also cause cash flow disruptions to your business. Consider, for example, that while roofing insulation used to be delivered within two weeks of your order, that same commodity can now take up to six months to be delivered. While you’re not installing roofing insulation, you’re also not getting paid for roofing insulation work. This disruption to your company’s cash flow must also be a part of your company’s overall risk management evaluation.

Are Your Workers’ Compensation Policies Sufficient?

As any businessperson familiar with the construction industry knows, a critical aspect of the commercial builders’ insurance portfolio is workers’ compensation policies. This has never been truer than it is in today’s economy. Specifically, the need for competitive workers’ compensation coverage results from the overall labor shortage.

With fewer workers available, many construction workers are being asked to consistently work overtime. While that may be good for their bottom line, it is well-known that fatigued workers are more likely to be injured on the job than those who are well-rested. Along with taking steps to reduce workplace fatigue, you’ll also want to make sure your company’s workers’ compensation policies are sufficient for your business needs. Otherwise, employee injuries could become a devastating burden to your company.

The truth is, none of us knows what lies ahead with respect to the pandemic, the ways in which the Russian invasion of Ukraine will impact our economy, or other factors that can negatively affect the construction industry. That means that the very best action construction companies can take right now is to make sure they have sufficient commercial builders’ insurance coverage in place.

Contact Roger for more information on a construction risk management evaluation, or any other issues you may have surrounding your insurance needs.