How to Add More Builders Risk to Your Book

By Mary Stiglic, US Assure

Mary Stiglic US AssureThe builders risk insurance market in 2021 is extremely hot. Construction levels are high, with ongoing new construction and  renovations. From an independent agent’s perspective, this means:

1. Agents can enter the builders risk market to gain new customers and increase their business.
2. Agents with an existing builders risk market can expand their client base.

Nationally, Dodge Data reported that residential construction starts were 22% higher for the 12 months ending June 2021 compared with the prior-year period. Single family starts gained 29%, while multifamily starts were up 5% on a 12-month sum basis.

The U.S. Commerce Department, meanwhile, reported in late July “a severe shortage of houses, which has boosted prices and sparked bidding wars across the country…” The department also reports that “demand for houses is being driven by low mortgage rates and a desire for more spacious accommodations during the COVID-19 pandemic.”


About builders risk insurance

It’s always best to have a policy that fits the exposure. Builders risk is distinct from homeowners insurance as it covers the materials, fixtures and/or equipment to be installed during construction or renovation. Policies are typically provided only for the length of the project. A standard builders risk policy should include coverage for perils like theft, fire, vandalism, backup of sewer, and materials in transit and at temporary locations (such as storage), to name just a few. When it comes to claims, the most common is fire, followed by theft of materials. Homeowners insurance likely insures few if any of those risks.

Homeowners may be planning to build a new home or private vacation getaway. After COVID, many are thinking about remodeling to accommodate new ways they want to live and work in their existing house. And, business owners may be modifying their spaces for more outdoor entertainment or finally making time for much needed improvements.

Usually a completion clause calls for coverage to end 60 days after construction ends. That includes coverage of the project while the building owners is waiting to sell. 

The most common claim is fire, then theft of materials.


How to enter the builders risk market

Whether you want to enter the market for the first time or grow your builders risk book, you must get a foot in the door by networking, starting with the obvious—your current customers! While the most important contacts for independent agents are builders, construction companies and contractors, it’s also essential to network with builders associations, financing firms, real estate brokers, loan officers and other influencers. For the residential construction market, key influencers are chambers of commerce, attorneys, real estate professionals, homeowners associations and banks.

I’ve known agents who have garnered business by dropping flyers on vehicles in the local Home Depot and Lowe’s. Stores like that have bulletin boards, too. Get your name out there.

On the commercial side, the selling process will take longer because of permitting and other pre-construction activities. This could be as long as 6-12 months in commercial construction. Permitting for a home, by contrast, could be the same day.

For the commercial construction market, many of the centers of influence are the same. Additional networking outlets include the chamber of commerce, attorneys and community leaders. That’s not all! You can find active leads by subscribing to contractor bidding sites like BidClerk and Construction Monitor, where building details like the contactor name are listed. Most of the projects are commercial, and you’re likely to find opportunities in your area to target your outreach.

About residential renovation trends

Any look at a TV home renovation program will show that new countertops, new appliances, updated kitchens, and bathroom remodels are in. With quarantining during 2020-21, homeowners are looking to “feather the nest” or create more living space. Led by HGTV and other shows, homeowners are favoring the open concept of removing walls between kitchens and family/living rooms or between kitchens and dining areas. In fact, families are spending lots of money doing this. 


About building prices

Much has been made about skyrocketing prices for lumber and materials. One thing to remember as an independent agent is that the price of a renovation or new constructions can give sticker shock to both commercial and personal lines clients. A $100,000 home project might now be priced at an additional $20,000 to allow for current costs. Agents need to reach out to customers who have builders risk in place (currently and in the future) to see if inflation is affecting total completed value. Secondly, lumber and materials prices aren’t the only causes of bumped-up costs. Contract change orders — such as for upgraded or additional appliances, fixtures, floors, lighting and other elements of a project — also increase costs.

Insurance agents, beware: Your commercial and personal lines customers may neglect to inform you about their course of construction projects. Check in with them regularly and provide builders risk education in your marketing communications. Remember, the opportunity is there. You simply have to start the conversation.

Mary Stiglic is marketing manager for US Assure (, which exclusively distributes, underwrites and services Zurich’s builders risk insurance program across the U.S.