The market for construction general liability insurance has stabilized after several challenging years for buyers, but concerns over rising legal awards and settlement amounts persist, and capacity remains fragmented.
Demand for coverage is expected to increase because of legislative changes and the rapid expansion of data center construction to support the growth of artificial intelligence and other technology, according to experts.
In addition, they say, policyholders are using a variety of coverage structures to ensure they are sufficiently protected as exposures evolve.
While the general liability environment is improving, sharp increases in auto liability insurance rates persist for construction companies, which often have large fleets (see related story below).
Policyholders and insurers are increasingly using technology to improve safety and reduce claims for all liability lines (see story below), the experts say.
The general liability and excess market for construction risks has stabilized, said Rob McDonough, Aon’s New York-based CEO of construction, infrastructure and surety for North America.
While policyholders need more insurers to fill out their programs than they did in the soft market, rate hikes have decelerated, he said.
Rate increases vary by layer, but primary rates are flat to 5% higher, and excess liability rates are up 2% to 8%, said John Johnson, Chicago-based construction practice leader-central zone for Marsh.
General liability rates are up 5% to 10%, and auto and lead umbrella rates are up by more than 10%, said Ed Totten, Philadelphia-based head of construction casualty at Axa XL, which focuses on large projects.
While some project starts have been delayed because of economic uncertainty surrounding tariffs, construction activity is expected to accelerate, fueling demand for coverage.
Tax incentives for nonresidential construction in the One Big Beautiful Bill Act, which was signed into law in July, will lead to more projects, said Jayson Taylor, New York-based head of casualty for MSIG USA, a unit of Mitsui Sumitomo Insurance.
“I’m expecting an uptick in the opportunities, because the Big Beautiful Bill signified that they have to start construction before 2029 and they have to put the plant into operation by 2031,” he said.
Inflation and increased litigation also are driving demand for increased limits, Mr. Taylor said.
Bigger project size in the data center and semiconductor sectors is bringing more complexity to the risks, said James Savage, Akron, Ohio-based head of construction casualty at Zurich North America.
“Whether it’s scheduling, whether it’s getting the supply chain right, all of those elements really force contractors to be very thoughtful about what they’re doing from a risk management standpoint,” he said.
Data centers are often a preferred risk from an underwriting perspective because they’re often built outside of urban areas and the construction is straightforward, said Aldo Fucentese, Boston-based head of large construction, Global Risk Solutions North America at Liberty Mutual.
However, they also require extensive cooling systems, which could increase the risk of leaks onto high-value electronic equipment, raising concerns about completed operations coverage, he said.
Program structures
Over the past three to five years, more construction projects have been covered through controlled insurance programs or wrap-ups, Mr. Savage said.
“There are a number of advantages, but I think fundamentally every contractor on the project will have the same coverages and the same project safety plan in place,” he said.
Risk managers have various ways to cover projects, such as through additional insurance for subcontractors, owner-controlled insurance programs and contractor-controlled insurance programs, said Ann Parnigoni, risk management and insurance lead for San Francisco-based Hathaway Dinwiddie Construction and president of the Risk & Insurance Management Society’s Golden Gate Chapter.
“We’re really trying to look at it to say, what is the best way to insure this project. Is the owner the right entity to have a wrap-up on this project? Have they never done one before? Is it their one and only building that they’re building? Maybe they are not the right entity, and we should do it through a CCIP,” she said.
OCIPs and CCIPs provide comprehensive coverage to protect an entire project. “They are a really great addition,” Ms. Parnigoni said.
In addition, professional liability risks are expanding into general liability exposures for contractors as project designs are spread among various companies, said Mr. Johnson of Marsh.
“Plans and specifications don’t necessarily give you 100% design, especially on fire safety, mechanical and electrical systems. You get a 50% design and you’re expected to finish it,” he said.
In a recent example, a general liability claim found to stem from a design issue ultimately resulted in a 60% allocation to the general liability insurer and 40% to the professional liability insurer, Mr. Johnson said.
Disputes between general liability and professional liability insurers have eased over the past five years, and insurers are changing how they apply deductibles, he said.
“We’ve gotten professional carriers to offer a deductible acceptance, so if you pay a GL deductible, it reduces the amount of the professional deductible,” Mr. Johnson said.
The complexity of construction projects, with money transferred to multiple companies involved, makes the sector vulnerable to cyberattacks, said Jason Kosek, New York-based shareholder at law firm Anderson Kill.
Sometimes general liability policies cover the losses, but construction companies should reconfigure their programs to include specialty cyber coverage, he said.
The coverage is often included in OCIPs and CCIPs, but “it’s not always required and it’s not always purchased on smaller projects,” Mr. Kosek said.
Excess towers
There is enough capacity in the domestic and international markets for construction liability risks, but insurers have significantly curbed what they are prepared to offer on individual risks, said Paul Primavera, Los Angeles-based U.S. construction practice leader at Lockton.
“For a $100 million excess tower, in the past it may be as little as two carriers that you could build that on. That’s not the case anymore. You may have as many as 10 carriers building that $100 million,” he said.
Capacity for the first $25 million is tight, but more insurers are offering capacity at higher layers, said Mr. Totten of Axa XL.
In addition, he said, more insurers are participating in quota share arrangements, where they share a layer with other insurers.
“You are starting to see a lot of it excess of $25 million, which historically you never saw, but that’s something that’s really popped up in the last three years,” Mr. Totten said.
Building large excess towers can be challenging, Ms. Parnigoni said.
“You keep seeing the layers getting smaller and smaller and those smaller layers being shared between two carriers, three carriers,” she said.
More complex towers may lead to more complicated claims, which can drive up settlements, Mr. Primavera said. Different insurers on a program may adjust their settlement strategies depending on where they are positioned on a tower and how likely a claim is to reach or exceed their layer, he said.
The long-term nature of construction projects, which can take several years to complete, heightens the exposure to potential liability claims, Mr. Taylor said.
MSIG is seeking to limit its exposure to large claims by offering lower limits on specific projects, he said.
“If we’re essentially covering the unknown risk, and if we’re going to get hit by the unknown risk, let’s make its impact a little bit less,” Mr. Taylor said.
Contractors try to temper soaring auto insurance costs
Commercial auto liability insurance has gone from an afterthought to a major concern for construction companies.
Like companies in other sectors, construction firms have experienced a sharp rise in auto liability rates in recent years as insurers cite higher legal awards and settlements as reasons for the increases.
As employers with large fleets of light trucks, they are seeking ways to lower premiums and reduce claims, often using telematics and other technology to reduce risks.
“Typically, as an industry, we paid the least amount of attention to auto, but now those claims are much larger and they do hit our excess tower,” said Ann Parnigoni, risk management and insurance lead for Hathaway Dinwiddie Construction in San Francisco and president of the Risk & Insurance Management Society’s Golden Gate Chapter.
Auto liability is the No. 1 issue for construction companies, said Aldo Fucentese, Boston-based head of large construction, Global Risk Solutions North America at Liberty Mutual.
“Up to five years ago, auto liability was an afterthought for us to underwrite, and then it really became an issue. We have seen the losses really exploding and the rates going up,” he said.
Rates on his portfolio have doubled in that time, Mr. Fucentese said.
Auto liability rates for contractors are rising 10% to 20% annually, and policyholders are having to accept considerably higher deductibles, said John Johnson, Chicago-based construction practice leader-central zone for Marsh.
Some large construction companies have thousands of vehicles, said Ed Totten, Philadelphia-based head of construction casualty at Axa XL.
“Any one of those losses can turn into a pretty substantial loss nowadays and that’s in multiple venues,” he said.
Most auto liability claims in construction occur away from job sites, said Paul Primavera, Los Angeles-based U.S. construction practice leader at Lockton.
“It’s the light passenger fleet, the pickup trucks, the cars that workers use getting to and from projects, or in between projects,” he said.
But causes of loss are similar to those in the heavy trucking industry, including driver history, fatigue, health-related issues and substance abuse, Mr. Primavera said.
Establishing clear driving policies, using background checks and drug testing and conducting medical assessments have proven to be effective risk mitigation tools, he said.
In addition, companies are increasingly using telematics and data analysis to mitigate auto liability risks.
Technology that detects things like speed and hard braking has become “table stakes” for fleets with more than 500 vehicles, Mr. Fucentese said.
Companies also use ongoing motor vehicle record monitoring to track drivers’ violations both on and off the clock, he said.
Hathaway Dinwiddie is using telematics technology to collect information in the event of a claim, but also to correct driving behavior, Ms. Parnigoni said.
While there was some driver concern about “Big Brother” when the technology was first introduced, that has diminished, she said.
“Sometimes it helps them,” she said. “If they just came to us and said, ‘Someone backed into my vehicle while it was parked,’ that may have sounded a little suspicious, but now we’ve got cameras to say, ‘You’re absolutely right, and we’ve got the license plate.’”
Some Zurich customers that have installed video-based telematics in their fleet vehicles have been cleared of blame in accidents because of the video footage. That also has resulted in a decrease in incidents, said James Savage, Akron, Ohio-based head of construction casualty at Zurich North America.
Axa XL works with policyholders and telematics providers to implement driving behavior changes with the data that’s collected, Mr. Totten said.
It’s too early, though, to see any changes in loss trends resulting from the use of telematics, he said.
“Telematics have been around for maybe five years and we’re seeing a lot more implementation, but from an underwriting perspective, you need probably a good 10 years of data,” Mr. Totten said.
Technology helps fill safety gap created by worker shortages
Risk managers and insurers are adopting new technology to enhance construction site safety as many contractors struggle to hire experienced workers.
While large contractors have long focused on site safety, rising liability losses have heightened concerns, and technological developments have presented new ways to mitigate risks, experts say.
Despite a slowdown in growth, contractors are finding it hard to fill job openings, according to a recent survey by the Associated General Contractors of America and the National Center for Construction Education.
The survey, done this summer, showed that 88% of contractors that employ craft workers have openings, and 83% of those reported that it was harder to fill those roles than a year ago.
Furthermore, 57% of contractors reported that available candidates lack essential skills or are not certified in the required areas.
According to a 2025 study by Travelers that analyzed claims from 2020 to 2024, 44% of construction injuries involved first-year workers, and first-year injuries drove 47% of construction workers comp claims costs.
“It’s actually really impactful to the workers comp line of business, in that inexperienced workers are more likely to be injured on the job,” said James Savage, Akron, Ohio-based head of construction casualty at Zurich North America.
New-hire training can help mitigate the risks, he said.
The labor shortage has eased somewhat over the past six months as project starts have been delayed because of economic uncertainty, but when work eventually picks up and more inexperienced workers are hired, “the bubble is going to burst,” said John Johnson, Chicago-based construction practice leader-central zone for Marsh.
Hathaway Dinwiddie Construction changed its general liability insurer this year as it sought more services to reduce injuries and claims, said Ann Parnigoni, risk management and insurance lead for the San Francisco-based company and president of the Risk & Insurance Management Society’s Golden Gate Chapter.
Choosing the insurer took several months, and the bidders on the account visited the company’s sites to demonstrate how their technology and analysis could reduce claims, Ms. Parnigoni said. “They gave us their opinions on what they could do and it seems to me they’re also interested in keeping claims down,” she said.
Hathaway Dinwiddie already had stringent safety measures in place, but the analysis also examines things like the bending motion of employees as they work and the ergonomic setup of sites, she said.
Technology that monitors employee movements, such as sensors or wearables, is becoming more common on sites, said Rob McDonough, New York-based CEO of construction, infrastructure and surety for North America at Aon.
“These are direct character traits around what leading companies are doing to adopt technology and best practices with an ultimate gain around worker safety and contractor profitability; the two go hand in hand,” he said.
Wearables also can monitor workers’ health and catch issues like heart attack risks, said Paul Primavera, Los Angeles-based U.S. construction practice leader at Lockton.
“It is a critical issue if you’re in an office, it’s even more of a critical issue if you’re outside on a project, on a beam,” he said.
More sites have fixed cameras, and OSHA-certified staff can review the footage and give workers coaching and feedback when they see risky behavior, such as walking under an active crane load, Mr. Savage said.
“That’s something that we’ve seen has significantly reduced incidents on job sites in the large projects that we tested it on,” he said.
More contractors are adopting wearables, such as helmet attachments that alert workers when they enter hazardous areas, but only a minority of contractors are using them, said Mr. Johnson of Marsh.
Companies also are using drones to obtain overhead views for projects, reducing falls from height, which have historically been a significant cause of losses, said Ed Totten, Philadelphia-based head of construction casualty at Axa XL.
“Instead of sending someone up on a lift to look down at a job site to see where it’s at, they’ll send the drones up now,” Mr. Totten said.
In addition, drones have become more sophisticated and can be used, for example, to monitor trench depths to ensure they comply with safety requirements, said Aldo Fucentese, Boston-based head of large construction, Global Risk Solutions North America at Liberty Mutual.
“You can see things that you can’t see from the ground level and you can measure things to a matter of inches,” he said.
Software is also available to analyze footage from portable cameras to detect potential safety hazards. The information also can be used to defend against claims, he said.
The hard-hat cameras are an evolving technology, Ms. Parnigoni said.
“It started off just being kind of a record of the project several years ago, when it first started coming out and now it’s evolving with AI technology,” she said.