At some point in their career, most construction executives have had to make a choice between one of two options:
  • Opt for a cost savings by bringing a lesser-known subcontractor, with a less-than-impressive reputation, onto an important new project.
  • Bring on a slightly more expensive, but trustworthy and reliable, subcontractor with which the company has maintained a positive relationship.
While there are certainly exceptions, most would elect to incur the cost of quality if it meant going with the subcontractor they trust will deliver on-time results with minimal risk involved.

It’s critical to take the same approach when evaluating insurance options. Making a higher spend at the beginning by investing in the cost of quality and minimized risk can often result in much greater savings at the end.   

Following are four critical factors to keep in mind when identifying a fitting insurance provider or plan.

Ability to Quickly Obtain Excess Limits
Choosing a provider that can offer the option to obtain excess limits is essential, especially if the company works in a market where it is notoriously difficult to secure excess limits, such as New York City. Once the firm has gone through the process of estimating for and bidding on a large new project, the last thing it wants to face is the possibility of having to turn it down because it cannot obtain the appropriate limits in time. A good rule of thumb is to play it safe by choosing a provider that has an AM Best rating of A or higher and is ready and willing to quickly help with the addition of excess limits, should the need arise.

Niche Expertise
Plenty of providers claim to be experts in the construction industry. However, it’s critical to take a closer look before investing in an insurance provider that claims to offer an umbrella solution for the construction industry. Construction has many niches that differ substantially from one another. For example, a luxury developer faces a completely unique and different set of risk factors than a multifamily housing developer.

Choosing an umbrella plan that claims to offer a solution to all of these niches within the larger industry raises the concern that the firm’s unique risk factors and challenges may not be covered as comprehensively (or at all) once the details of the provider’s program are explored.

Opportunity to Better the Business
Insurance often is viewed as a necessary evil; companies have to make recurring payments for a product or service they may never even use, but need in order to win and maintain business. So, the idea of a provider bettering the business by streamlining back office processes may seem completely unrealistic.

However, options within today’s marketplace can offer various program elements meant to help address headaches faced by those who work within specific industry niches.

For example, a provider might offer general contractors that manage a high volume of subcontractors a discount on background checks through a partnership with a well-known service. Other perks might include a solar-powered camera designed to provide 24-hour surveillance of various sites for quick access on building status, monitoring for theft or vandalism, oversight of subcontractor personnel and marketing activities.

Endorsement by Trusted Third Parties

Before making the final decision on which provider or program makes the most sense for a company, contractors should do a bit of research to determine whether any well-known industry associations endorse a certain provider in the construction sector. A firm may not even have to be a member of the organization to get this free, yet valuable, information on which providers and services trusted third-party organizations recommend. 


Jake Morin is a program manager in ProSight Specialty Insurance’s construction and casualty practices. For more information, email jmorin@prosightspecialty.com.