“Construction companies should be tracking material cost trends, vendor and supplier communications, permitting backlogs, inventory levels, and global trade policies,” said Daniel Ginden (pictured
right), managing director at Novatae Risk Group.
With US tariffs increasing on core inputs like steel and aluminum, those indicators are no longer just background data – they’re real-time risk signals. Permitting slowdowns aren’t just bureaucratic – they can derail entire project timelines.
“Every time that there's a delay in the chain, the permits need to be pushed back and procured at a different date,” Ginden said.
Those delays ripple downstream, triggering a rush on already strained material inventories. “People are at year end, especially when closing books, they're going to try to stockpile, which will then lead to a depletion from some of the suppliers,” he said.
The result: cost inflation, supply bottlenecks, and scheduling uncertainty – threatening both contractor profitability and insurability.
While larger contractors may weather the storm by bulk-buying materials and utilizing warehouse space, small and midsize firms face steeper challenges.
“Big players have liquidity and capacity. But smaller contractors need to rely on strategic vendor relationships,” Ginden said.
He warned that cost-cutting via unknown vendors or last-minute deals can backfire. “Even if it’s going to be a little bit more expensive, you can account for that in your budgeting. But it’s more important to have access than to be scrambling and without.”
In today’s tight supply chain environment, vendor loyalty and inventory reliability are more valuable than deep discounts.
Amid increasing supply chain risk, insurance providers are reengineering coverage to reflect modern construction challenges.
“Some of our programs look at reasons for delays – like a subcontractor default due to material shortages,” said Ginden.
A key innovation is the bundling of supply chain interruption coverage with traditional builder’s risk or contractor default policies. “We’re seeing insurance structures borrowed from logistics and tailored for construction,” he said.
Parametric insurance – traditionally used in agriculture and catastrophe response – is now entering the construction market. “Let’s say the cost of steel rises by X percent. A parametric policy can automatically trigger a specified payout,” said Ginden.
Builders’ risk policies are also evolving. Where 90-day coverage was once standard, Ginden now advises contractors to extend to six months – especially heading into hurricane season. “If you wait too long, extensions may be denied,” he said.
Resilience in this environment goes beyond policy tweaks – it requires better alignment between insurance stakeholders and contractors on the ground.
“If you’re not at the jobsite, listening to insureds, you’re going to fail,” Ginden said.
Novatae’s approach to developing a liability program for general contractors and home builders started with a simple question: What’s causing loss ratios to spike?
“We looked at how construction defect claims play out across state lines. You have to understand the legal hurdles first. Then you can layer in the product structure.” Ginden said.
This legal-first underwriting model helps contractors navigate liability risks tied to regional statutes – a growing challenge in markets where litigation is rising.
But Ginden emphasized that influencing underwriting or regulation takes more than a good story. “You need strategic alliances and hard data. You have to bring evidence to carriers and reinsurers.”
Education is now mission-critical. Ginden called for a renewed focus across firms on understanding core insurance concepts like “subcontractor default,” “construction defect liability,” and “material delay impact.”
“If you’re not educating your teams, you’ll never be able to advocate effectively,” he said.
Whether through stronger vendor communication, smarter procurement strategies, or better-tailored insurance programs, the firms that combine insight with action will lead the next era of construction resilience.
