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Builders Risk, Construction Costs and delays. What's the Solutions?

Higher prices continue to affect the housing market.  As stated in a recent NAHB article citing a Bureau of labor statics report, prices are up 20.4% year over year and have gone up 31.3% since 2020.  There is hope that the inflationary pressure on building products will stabilize, but it remains to be seen if that will alleviate the concerns with inventory shortages.  Most builders that we speak with are still having issues with delivery of window and door packages that are at a minimum of 4 months out.  Builders are having issues getting lumber package pricing more than 30 days out.  These issues create major problems when attempting to build a budget, create a timeline and ultimately generate a profit from the build.  What’s more concerning is that while all these factors are changing in real time you are attempting to manage any unexpected losses with a responsible Builders Risk program.  While attempting to scratch out profit, you have timeline issues that may cause materials to be onsite longer than expected creating a potential for theft or weather-related losses. At Binders Insurance Group, we want to help you identify questions and gaps that can help you better budget and/or avoid losses that can eliminate any profit you were expecting from your endeavors.

·         What are the areas of concern for your builders risk policy:

o   Building materials on the jobsite or in temporary storage

  • Can you get coverage or should your client?

o   Increase cost of materials from the date of bid to the date of loss

  • What process are you or your insurance agent implementing?

o   How are you going to handle the cost difference in materials

o   If you have to adjust for shortage of materials will you incur more architectural/engineering fees, permit fees.  There are a lot of soft costs that can quickly spiral out of control

  • Will your policy even cover this?

o   Can you issue a change order?  What ramification is that going to have on profit, timeline etc.?  

  • Are you implementing a sliding scale or going back to your client every time?

o   What if delays in delivery/installation push back the completion date?  Will you be able to get an extension?

  • Numerous carriers will not allow an extension. What options are you getting from your current insurance agent?

Binders Insurance Group is an independent insurance agency specializing in Builders Risk and Construction Risk in Georgia and Alabama.  If you have questions regarding what options are available to you on your Builders Risk program please feel free to reach out to our office at 470-729-6400 or email

Posted Thursday, June 16 2022 2:48 PM

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