Construction projects rarely go exactly as planned. In today’s market, unpredictability has only escalated. From supply chain disruptions and labor shortages to weather volatility and rising material costs, delays have become more common and costly. Builders’ Risk insurance plays an essential role in projecting construction projects. Finding the right coverage and understanding the impact of delays is necessary to keep up with rapidly evolving exposures.
Why Construction Delays are Becoming Typical
Today’s market pressures are making delays harder to avoid:
- Rising costs driving higher project values mid-build
- Labor shortages causing construction to slow down
- Financing and permitting delays impacting project timelines
These factors increase the odds of financial fallout during the course of construction.
The Impact on Builders’ Risk Coverage
Builders’ Risk policies are typically written for specific project value and construction timelines. When projects run longer than expected, coverage can expire without an extension policy. Delays may cause coverage to expire before the project is complete, limits become insufficient as material and labor costs rise, or soft costs to go ignored as timelines extend. Without the proper extensions in place, projects may also be exposed to uncovered losses. Without proactive management, even a well-structured policy can quickly become insufficient.
What Brokers Should Review When Delays Occur
- Policy Term & Extensions – agent and project manager should be diligent with the overview of the project timeline. This should also be reviewed with the policy terms, conditions and project completion dates – coverage needs to be confirmed for coverage when project extends beyond the original finish or policy coverage expiration date and if not, request an extension
- Accurate Project Valuation – review limits to guarantee that rising material and labor costs are reflected properly
- Soft Costs & Delay-Related Expenses – assess whether additional delay-related expenses are covered
- Perils & Location-Specific Risks – evaluate how factors such as weather conditions or theft exposure may impact the project as it advances
Why Ongoing Communication is Crucial
Builders’ Risk coverage requires ongoing attention throughout the life of a project. Regular communication between brokers, insureds, and underwriters is essential as project details change. Updates such as changes to scope or design, material substitutions, schedule delays, or budget increases should instigate a coverage review. Addressing these changes early allows coverage to evolve alongside the project and helps reduce the risk of uninsured losses.
Key Takeaways
Construction delays can quickly turn into financial losses if Builders’ Risk coverage is not adjusted along the way. Regular policy reviews and open communication help ensure coverage remains aligned with real-world project conditions. Connect with Falvey’s Inland Marine team to evaluate Builders’ Risk coverage and help safeguard projects from delay-driven risks.
