Word out of the construction insurance brokerage community is that the construction insurance industry has entered a hard market, seemingly overnight. Property (i.e. builder’s risk), liability and wrap-up markets are all reacting unfavorably, resulting in higher premiums and decreased availability of coverage options.

The prospect of a hard market has been looming for some time given massive weather driven property losses and historically low rates (among other factors). It appears the time is upon us.

Key takeaways for construction professionals are:

• Expect insurance premiums to go up, potentially significantly, at renewal time and/or when seeking a new project specific program (e.g., an OCIP, CCIP, etc.).
• Expect that the available coverage will get worse. Carriers may be unable to offer once standard coverage enhancements and/or may add new exclusions.
• If quotes have been offered consider locking them in now, before the underwriters are forced to increase the rates/restrict coverage, or pull the quotes entirely.
• With respect to wrap-ups and other project specific programs, consider requesting extensions now if the project is expected to go beyond the current policy term.
• As always, the risk management team (lawyer, broker, risk manager) should work together to carefully review contracts and coverage. This will become even more important if the carriers start to introduce new exclusions as a result of the hard market.

Hard markets come and go. The tough times are when true construction insurance professionals separate themselves from the pack and become the key to weathering the storm.

Jason M. Adams, Esq. is Senior Counsel at Gibbs Giden representing construction professionals (owners/developers, contractors, architects, etc.) in the areas of Construction Law, Insurance Law and Risk Management, Common Interest Community Law (HOA) and Business/Civil Litigation. Adams is also a licensed property and casualty insurance broker and certified Construction Risk & Insurance Specialist (CRIS). Gibbs Giden is nationally and locally recognized by U. S. News and Best Lawyers as among the “Best Law Firms” in both Construction Law and Construction Litigation. Chambers USA Directory of Leading Lawyers has consistently recognized Gibbs Giden as among California’s elite construction law firms. Mr. Adams can be reached at jadams@gibbsgiden.com.