Wood-built projects pose a greater risk, and it’s increasingly important in today’s insurance market for contractors to understand the landscape and what they can do to moderate the ever-increasing cost. Timber frame construction has become increasingly popular due to its cost effectiveness and versatility. However, it also presents inherent and amplified risks that contractors must address carefully.
On the surface, wood frame construction comes with these risks, many of which contractors are already familiar with:
- Fire risk: The flammability of wood, compared to steel and concrete, increases fire risks, which translates into challenges in contracting wood frame projects.
- Water risk: Residential wood frame projects, with their extensive plumbing, can be damaged on several levels by water. Water-damaged wood is prone to warping, rotting, mold and pest infestations.
- Structural integrity: The vulnerability of wood to fire, water, pests and the natural elements can jeopardize the structural integrity of the building during and after construction.
- Variety of construction techniques: Different methods in the construction of timber frames can lead to varying levels of quality and workmanship.
Added to these risk factors is the ever-increasing volatility that currently underpins the insurance landscape. Natural disasters, including wildfires, floods, hurricanes and earthquakes are increasing, and the areas where these events occur are expanding. According to the National Oceanic and Atmospheric Administration, the United States has experienced an average of $8 billion per year over the past four decades, but that average has increased to nearly 18 events per year over the past five years. Due to the unmistakable increase in the frequency and overall cost of these catastrophes, insurance companies have begun to withdraw from the markets entirely, limiting capacity and access.
Other contributing factors include rising construction material costs, supply chain disruptions, labor shortages and the ongoing recovery from the impacts of COVID-19. All these factors culminate in increased costs and project delays, which subsequently lead to higher premiums and general instability in the insurance market.
In order to help limit insurance premiums on their wood framing projects, contractors must identify and address operational risk factors that are within their control. By proactively identifying and mitigating these risks, contractors can ensure that project execution runs smoothly and, in doing so, can advocate for reduced insurance costs.
So what specifically can a contractor do? Read the full article to find.
