Changes and Challenges in the Builder’s Risk Insurance Market

Written By: Nathan Kerr, Scott Insurance, Vice President & Affordable Housing Practice Lead

Builder’s Risk Insurance Marke

It’s no secret that affordable housing organizations today are facing significant financial pressures from nearly every direction. Unfortunately, the challenging insurance market is no exception. While today’s insurance market is seeing significant pricing increases on most lines of coverage, this article focuses on changes and trends we are seeing in the builder’s risk insurance market.

1. Pricing
Capacity (limits) continues to shrink with the major builder’s risk insurance carriers.  Due to this shrinking capacity, it is more important than ever to provide full project details - distance between buildings, site plans, construction timeline, etc. For larger projects the E&S (Excess/Surplus) market is becoming the norm.  While pricing varies due to many variables (construction, location, etc.), rates continue to climb.  Not long ago, rates in the $.20-$.30 range were commonplace; today the rate ranges are $.40+.

2. Length of Coverage
Due to supply chain issues, funding delays, etc., most projects are being delayed and taking longer than 12 months. While most insurance policies are annual policies, builder’s risk policies can be structured for longer intervals.  Rather than allowing the underwriters the ability to not extend the builders risk policy, we recommend structuring the policy on a project term basis (14, 16, 18 months) rather than an annual policy.

3. Subjectivities
In the past, the insurance carriers would recommend safety and risk management practices.  Now, these measures are required and can add significant cost to a development project.  In today’s market, subjectivities typically include the following: fencing and lighting, 24-hour surveillance (virtual surveillance or a guard service), wet works programs, rate of rise detectors, etc.

It is important to be prepared and budget appropriately as these trends compound the rising costs elsewhere in development projects. To obtain the best possible coverage, it is more critical than ever to present your organization (and development project) in a favorable light.

Nathan Kerr leads the Affordable Housing Practice Group at Scott Insurance.  He works as an advocate, advisor and broker, helping affordable housing organizations manage their unique risks and lower their insurance costs so they can focus on their mission of improving lives and communities. Nathan can be reached at or 540-224-1774.