In 2025, the U.S. construction industry is facing a perfect storm of challenges. Alongside labor shortages and inflation, builders now find themselves wrestling with another escalating expense: insurance. Specifically, builders risk insurance cost has surged across the country, complicating budgets and timelines for both commercial and residential projects. Once seen as a manageable line item, builder’s risk insurance is now commanding far more attention — and raising tough questions about long-term project viability. It is why Management should think about seeking the advice of independent insurance consultants such as DeshCap when negotiating with Brokers or triggering coverage at loss. Since they are not compensated to sell the insurance, an unbiased procurement by independent insurance consultants will often lead to costs being minimized while achieving tailored coverage.
Climate Change Is Making Insurance Underwriting More Difficult
The increasing frequency and intensity of climate-related events — including wildfires, hurricanes, floods, and tornadoes — is having a dramatic impact on construction risk profiles. Sites located in regions previously considered low-risk are now experiencing severe weather damage, which results in more claims and higher payouts from insurers. As a result, underwriters are re-evaluating coverage terms and raising premiums, especially for projects in climate-sensitive zones. Builders risk insurance cost is no longer predictable or uniform; it’s now heavily influenced by geography and climate modeling.
Supply Chain Disruptions Have Elevated Project Risk
Global supply chain instability continues to impact the delivery of key construction materials, from lumber and concrete to electrical components. Delays in procurement not only extend timelines but also increase exposure to risk during construction — particularly when projects sit half-completed or unprotected for longer-than-expected periods. For insurers, these delays translate into more vulnerable periods where damage, theft, or vandalism could occur. Consequently, many providers are adjusting their policies and charging higher premiums to account for this extended liability window.
Labor Shortages Are Amplifying Safety and Scheduling Risks
Skilled labor remains in short supply across the U.S. construction industry, forcing many projects to rely on less experienced crews or adopt tight timelines that raise the risk of accidents and construction defects. Insurers are paying close attention to workforce trends, as jobsite safety and proper supervision directly impact claims. As the pool of skilled workers shrinks, so does the margin for error — and that heightened risk is being passed on to builders in the form of elevated insurance costs.
Higher Material Costs Mean Bigger Payouts — and Bigger Premiums
With the cost of construction materials still inflated post-pandemic, the price tag of repairing or replacing damaged structures has soared. This means that insurers are now potentially on the hook for significantly larger payouts when claims are made. To manage this increased exposure, they’re recalibrating builders risk insurance cost models and often placing caps on certain coverage elements. For developers, this means more complex negotiations with carriers and greater difficulty locking in affordable policies.
As builders risk insurance costs continue to rise amid climate threats and global supply chain issues, U.S. construction firms must rethink how they plan, insure, and execute projects. Mitigating risk is no longer just about following safety protocols — it’s about understanding the broader forces shaping the insurance market and proactively adapting by having the field expertise to negotiate effectively with insurance brokers. From site selection and scheduling to contractor hiring and material sourcing, today’s builders must treat risk as a central factor in every decision. In this new reality, resilience and foresight are just as important as bricks and mortar.