NEW YORK'S
Builders Risk Insurance

Builders risk insurance is a crucial safeguard for construction projects, protecting against losses and damages during the building process. For contractors, developers, and property owners in New York, understanding the nuances of builders risk insurance is essential, especially given the state's unique legal environment and market dynamics. This comprehensive guide explores everything you need to know about builders risk insurance in New York, from market trends and coverage essentials to the impact of local laws such as the Scaffold Law.

Builders risk insurance, also known as course of construction insurance, covers buildings and structures while they are under construction. It typically protects against risks like fire, theft, vandalism, and certain natural disasters, offering financial security during the vulnerable construction phase.

In New York, builders risk insurance is particularly important due to the high costs and complexities associated with construction projects. The state's dense urban areas and stringent building codes increase exposure to risks, making comprehensive coverage a necessity. Additionally, the diverse weather patterns in New York, which can range from heavy snowfall in winter to severe thunderstorms in summer, further complicate the construction landscape. These environmental factors necessitate a robust insurance policy that can adapt to the unique challenges presented by each season.

Nationwide, builders risk insurance is becoming more prevalent. In fact, by 2025, it is expected that 89% of U.S. construction projects will have builders risk insurance, reflecting a 4% increase from the previous year. This trend underscores the growing recognition of the value of such coverage across the construction industry. For New York projects, this trend is amplified by local factors that raise the stakes for builders and owners alike. Builders risk insurance coverage statistics highlight this growing demand nationwide.

Moreover, builders risk insurance can be tailored to meet the specific needs of a project, which is particularly beneficial in a state like New York where construction projects can vary dramatically in size and scope. Policies can be customized to include coverage for materials stored off-site, equipment, and even soft costs such as lost income due to project delays. This flexibility ensures that builders and developers can secure the precise coverage they need, mitigating potential financial losses that could arise from unforeseen events. As the construction industry continues to evolve, understanding the nuances of builders risk insurance will be crucial for stakeholders aiming to protect their investments and ensure project success.

The builders risk insurance market is experiencing significant growth. Projections estimate the market will expand from $5.36 billion in 2024 to $8.75 billion by 2033. This growth reflects increased construction activity and heightened awareness of the risks involved in building projects.

However, the market is not without its challenges. Brady Thomas, Assistant Vice President at Munich Re Specialty, points out that the current environment is marked by uncertainty. He notes, "One of the big headwinds here is uncertainty. [Nothing is] very calm at the moment – it might seem static but it's not. It's unknown what's going to happen." This volatility affects underwriting and pricing, making it essential for New York builders and developers to stay informed about market shifts.

Additionally, capacity in the builders risk insurance market continues to grow, driven by both new entrants and existing insurers expanding their shares. This increased capacity can lead to more competitive pricing, but also reflects the complex risk landscape insurers must navigate. For more on market capacity and dynamics, see the Amwins report on builders risk market capacity.

As the market evolves, technology plays an increasingly pivotal role in shaping the future of builders risk insurance. Insurers are leveraging advanced analytics and artificial intelligence to assess risks more accurately, streamline underwriting processes, and enhance customer service. For instance, predictive modeling can help insurers identify potential hazards before they manifest, allowing for more tailored coverage options. This tech-driven approach not only improves efficiency but also fosters a more proactive risk management culture among builders and developers.

Moreover, sustainability trends in construction are influencing the builders risk insurance landscape. With a growing emphasis on green building practices and eco-friendly materials, insurers are beginning to adapt their policies to accommodate these innovations. This shift not only addresses the unique risks associated with sustainable construction but also aligns with broader industry goals of reducing environmental impact. As builders and developers increasingly prioritize sustainability, insurers that can offer specialized coverage for these projects may find themselves at a competitive advantage in the expanding market.

One of the defining factors influencing builders risk insurance costs and claims in New York is the Scaffold Law. Officially known as Labor Law Section 240, this legislation holds property owners and contractors strictly liable for elevation-related injuries to workers, regardless of negligence. This strict liability framework has profound implications for insurance premiums and claims.

A study by the American Insurance Association revealed that loss costs in New York City are as much as 500% higher than in seven other states combined. Even outside New York City, the state averages 232% higher loss costs, largely attributed to the Scaffold Law. These figures illustrate the significant financial burden this law places on construction projects within the state.

Joanne Bentivegna, risk manager at JB Risk Services, emphasizes the inevitability of claims under this law, stating, "If a person is injured, it is not a question of whether the builder and property owner will be sued, it is just a question of when and how much the claims will be." This certainty drives up insurance costs and complicates risk management strategies for builders in New York. For a detailed perspective on the Scaffold Law’s impact, visit JB Risk Services’ insight on Scaffold Law.

The implications of the Scaffold Law extend beyond just financial burdens; they also shape the safety culture within the construction industry. Contractors are often compelled to invest heavily in safety measures, including advanced training programs and enhanced protective equipment, to mitigate the risks associated with elevation work. This proactive approach not only aims to reduce the likelihood of accidents but also serves as a crucial defense strategy in the event of a claim. As safety becomes a priority, many firms are adopting innovative technologies, such as drones for site inspections and virtual reality for training, to further enhance worker safety and compliance with the law.

Moreover, the Scaffold Law has sparked ongoing debates among industry stakeholders, including labor unions, construction firms, and insurance providers. Proponents argue that the law is essential for protecting workers in a high-risk environment, while critics contend that it stifles development and drives up costs, ultimately harming job creation. This contentious landscape has led to calls for reform, with some advocating for a more balanced approach that would still prioritize worker safety but also consider the economic implications for construction projects across New York. As discussions continue, the future of the Scaffold Law remains a critical topic for anyone involved in the construction industry in the state.

Beyond the Scaffold Law, builders risk insurance in New York faces several other challenges. One notable issue is the rise in claims due to natural disasters. In 2025, natural disasters contributed to a 17% increase in builders risk claims nationwide, prompting insurers to update catastrophe risk models. For New York, with its exposure to hurricanes and severe storms, this trend is particularly relevant. The frequency and intensity of these weather events have made it imperative for insurers to reassess their underwriting criteria and pricing strategies, leading to a more cautious approach in issuing policies. As a result, builders may find themselves facing higher premiums or stricter terms, which can significantly impact project budgets and timelines.

Another challenge is the current market dynamic characterized by rate softening. According to an industry report by Amwins, rate softening is widespread, driven by heightened competition among insurers and hesitation among developers facing tighter profit margins and broader economic headwinds. This environment can create uncertainty for builders seeking stable and affordable coverage. Additionally, the influx of new entrants into the builders risk insurance market has led to aggressive pricing strategies, which, while initially beneficial for consumers, may not be sustainable in the long run. As these companies strive to gain market share, they may inadvertently compromise on the quality of coverage or customer service, leaving builders vulnerable to potential claims disputes.

These factors combined mean that builders and developers in New York must carefully evaluate their insurance needs and work closely with knowledgeable brokers to secure appropriate coverage. The evolving market and risk landscape require proactive management to avoid gaps in protection. It is essential for stakeholders to stay informed about legislative changes, emerging risks, and advancements in risk management practices. Engaging in regular risk assessments and maintaining open lines of communication with insurers can help mitigate potential issues before they escalate. For more on market dynamics, see the Amwins state of the market report.

When selecting builders risk insurance in New York, it is important to understand the scope of coverage and exclusions. Typical policies cover damage from fire, theft, vandalism, and certain weather events, but may exclude floods, earthquakes, and other perils unless specifically added. In a state known for its diverse climate and geographical features, builders must be particularly vigilant about these exclusions. For instance, while a policy might cover wind damage from a storm, it may not extend to the flooding that often accompanies heavy rainfall, especially in low-lying areas. This necessitates a thorough review of local weather patterns and historical data to ensure that all potential risks are adequately addressed.

Given New York’s unique risks, including the Scaffold Law and higher natural disaster exposure, builders should consider endorsements or additional coverages tailored to their projects. Coverage limits should reflect the total value of the construction, including materials, labor, and soft costs such as architectural fees and financing expenses. Moreover, builders should also take into account the potential for increased costs due to inflation or changes in material prices during the construction period. This is particularly relevant in a dynamic market like New York, where material costs can fluctuate significantly, impacting the overall budget and necessitating a reassessment of coverage limits to ensure full protection against unexpected expenses.

Another important aspect is the policy’s duration and the process for extending coverage if construction delays occur. Since delays are common in urban environments like New York City, ensuring continuous protection is critical to avoid uninsured periods. Builders should also be aware of the specific terms regarding what constitutes a delay and how it affects coverage. For example, delays caused by labor strikes or supply chain disruptions may require additional documentation to justify an extension. Furthermore, understanding the claims process and the timeline for filing claims is essential, as this can vary significantly between insurers. Builders should maintain open lines of communication with their insurance providers to navigate these complexities effectively and ensure that they are adequately covered throughout the construction timeline.

Successfully managing builders risk insurance in New York involves several best practices. First, engage with insurance professionals who understand the local market and legal environment. Their expertise can help tailor coverage to specific project needs and navigate challenges like the Scaffold Law. This law, which holds contractors liable for injuries that occur on construction sites, underscores the importance of having comprehensive insurance that covers not only property damage but also potential liability claims arising from accidents.

Second, maintain thorough documentation of the construction process and risk management measures. This can be invaluable in the event of a claim, helping to establish timelines and demonstrate compliance with safety standards. Detailed records, including contracts, change orders, and safety inspections, can significantly bolster your position should a dispute arise. Additionally, consider implementing a digital project management system to streamline documentation and ensure that all stakeholders have access to real-time updates, which can further enhance transparency and accountability.

Lastly, stay informed about market trends and regulatory changes. With the builders risk insurance market evolving rapidly, being proactive can help secure better terms and avoid surprises. Regularly review your policy and coverage limits, as construction projects can often expand in scope or duration, necessitating adjustments to your insurance. Furthermore, networking with other construction professionals can provide insights into emerging best practices and innovative risk management strategies that can enhance your project's resilience against unforeseen events.

Builders risk insurance is a vital component of construction risk management in New York. The state’s unique legal landscape, especially the Scaffold Law, combined with market uncertainties and rising natural disaster claims, makes comprehensive and well-structured insurance coverage essential.

With the builders risk insurance market projected to grow significantly over the next decade, and coverage becoming more widespread across construction projects, New York builders and developers must prioritize understanding and securing the right policies. Leveraging expert insights and staying abreast of market developments will help ensure projects are protected against the many risks inherent in construction.

For further reading on the evolving builders risk insurance market and its challenges, explore the Munich Re Specialty insights on market uncertainty.