Wellness and Population Health Management

Most contractors establish their liability coverage limits when they first set up their insurance program and revisit them at renewal primarily as a cost exercise rather than a coverage adequacy review. That approach worked reasonably well when the liability environment was more stable. In 2026, more contractors are pausing to ask whether their current umbrella limits still reflect the projects they are pursuing and the legal climate they are operating in.

This is not an emergency situation. It is a routine program review conversation that has become more relevant as commercial liability claim severity has increased across industries over the past several years. Contractors who have not formally reviewed their umbrella program in two or three years are finding it a worthwhile exercise to confirm the coverage structure still aligns with their current risk profile.

What Has Changed in the Liability Environment

Commercial liability losses in the United States have been rising. According to Swiss Re, US commercial liability losses reached $143 billion in 2023, reflecting the combined impact of rising medical costs, increased litigation activity, and higher jury awards across multiple lines of business. Construction is among the industries most closely affected because construction work involves physical activity, multiple parties on shared job sites, and contractual relationships that can draw contractors into claims they did not initially anticipate.

According to Construction Executive’s 2026 industry outlook, excess and umbrella liability rates for construction accounts are projected to increase by as much as 15 percent in 2026. This pricing reflects how carriers are assessing the underlying exposure across the industry, and it is a practical signal that reviewing umbrella limits as part of the renewal conversation is time well spent.

It is worth noting that the commercial general liability market for construction remains largely stable and competitive. The umbrella layer is where the market has become more focused on underwriting discipline, and that is where most contractors benefit from taking a closer look.

What Umbrella Insurance Does for Contractors

Umbrella insurance provides an additional layer of liability protection above the limits of a contractor’s general liability, commercial auto, and workers’ compensation policies. When a claim exhausts the limits of one of those underlying policies, the umbrella steps in to cover the remaining loss up to the umbrella’s own limits.

For most contractors, the umbrella program is what determines how much financial exposure remains on the business side after insurance responds to a serious incident. A general liability policy with $1 million per occurrence coverage handles the large majority of routine claims. For a significant injury that involves extended medical treatment, lost wages, and extended legal fees, the umbrella is what provides coverage above the primary layer.

The umbrella also plays a practical role in contract qualification. Project owners and general contractors increasingly specify minimum umbrella limits as a condition of bid eligibility. A contractor whose umbrella limits fall below what a project requires may find themselves effectively disqualified from certain work, regardless of their qualifications or track record.

How to Think About the Right Limits for Your Operation

Determining appropriate umbrella limits is not a single formula that applies to every contractor. Several factors shape how an individual firm should calibrate their program.

The nature of the work is one consideration. Contractors performing work at heights, in confined spaces, or in environments with significant public exposure have different risk profiles than contractors working in controlled interior environments. The scale of projects matters as well. A contractor working on larger projects with more workers and more subcontractors on site has proportionally more complexity to manage and more opportunities for a significant incident to develop.

Contract requirements provide a practical starting point for establishing a floor. Reviewing the umbrella limits specified in current and anticipated contracts helps confirm whether the existing program meets the thresholds required to pursue the work the contractor wants to win. Many mid-size commercial projects now specify total liability coverage, including umbrella, in the range of $5 million to $10 million as a standard contract condition.

The annual renewal is the right moment to have this conversation. Reviewing the umbrella alongside the general liability and commercial auto policies as a single program gives a more complete picture than treating the umbrella as a fixed number that carries over automatically from year to year.

A commercial insurance program review that specifically addresses the umbrella layer is a practical step that most contractors can complete at their next renewal without significant disruption. For contractors who are also actively pursuing bonded work, discussing the umbrella program alongside the surety bond review gives a more complete picture of the overall risk transfer program.

Ready to confirm your umbrella coverage reflects your current operation? The team at Tooher-Ferraris has been helping contractors build appropriate insurance programs since 1932. Contact us today to schedule a no-obligation consultation.

Builder’s risk insurance is a standard component of most construction project programs, and the policy form that works well for a traditional design-bid-build project may benefit from review when the delivery method is design-build.

The distinction matters because design-build projects create exposures that standard builder’s risk forms were not written to address. Understanding where those considerations arise is useful for any design-build firm that wants to confirm its project insurance program is appropriately structured before work begins.

What Standard Builder’s Risk Covers

A standard builder’s risk policy covers the physical project under construction against direct physical loss or damage from covered causes, which typically include fire, wind, lightning, theft, vandalism, and accidental damage during the construction process. Coverage attaches when physical construction begins and terminates at project completion, occupancy, or policy expiration.

The policy insures the value of the work in place, including materials stored on site and, in many forms, materials in transit to the project. Most policies also include coverage for the cost of demolition and debris removal following a covered loss.

Standard builder’s risk was designed around a project delivery model in which the design is substantially complete before construction begins. The contractor builds from finalized plans, and the risk the builder’s risk policy addresses is primarily physical — what happens to the structure and materials while they are being assembled.

How Design-Build Changes the Coverage Equation

In a design-build delivery, the design and construction processes overlap. The design-build contractor begins performing design work before any physical construction starts, and design development continues in parallel with early construction phases on many projects. This creates a pre-construction design phase during which costs are accumulating and contractual commitments are being made, but no physical construction exists to trigger coverage under a standard builder’s risk form.

Standard builder’s risk policies also include professional liability exclusions, which remove coverage for losses arising from design errors, omissions, or professional negligence. In a traditional design-bid-build project, this exclusion does not create a significant gap for the contractor because the contractor is not responsible for the design. In a design-build project, where the contractor holds both the design and construction obligations, the professional liability exclusion in the builder’s risk form intersects with the contractor’s own professional liability exposure in ways that deserve careful attention.

According to the Design-Build Institute of America, design-build delivery now accounts for more than 44 percent of US construction volume across commercial, institutional, and infrastructure sectors. As design-build has grown as a delivery method, the insurance market has developed coverage options specifically structured for the design-build environment, including policy forms that address the pre-construction phase, modified delay in completion coverage, and more explicit treatment of professional liability exposure in the context of builder’s risk.

The question of who provides the builder’s risk policy on a design-build project, whether the project owner or the design-build contractor, is determined by the contract and should be confirmed before the project begins. The contract should clearly specify who is responsible for obtaining the policy, what coverage limits apply, who is named as an insured, and how the builder’s risk policy interacts with the separate professional liability coverage carried by the design-build contractor.

What to Review in Your Design-Build Builder’s Risk Program

A design-build firm reviewing its project insurance program should confirm several specific items.

Coverage for the pre-construction design phase should be addressed in the program structure, whether through a soft costs endorsement, a design-build specific policy form, or another mechanism. The interaction between the builder’s risk form and the firm’s professional liability policy should be reviewed to confirm that the professional liability exclusion in the builder’s risk form does not leave a gap for design-related losses.

Delay in completion coverage, which addresses the financial costs of project delays, should be reviewed specifically for how design-caused delays are treated. An exclusion for delays attributable to design errors can create gaps on design-build projects that would not exist on a traditionally delivered project of comparable scope and value.

Subcontractor coverage is another consideration. Whether subcontractor work is covered under the design-build contractor’s builder’s risk program, or whether subcontractors are required to obtain their own coverage for their scope, should be clearly addressed in both the policy and the contract with each subcontractor.

Reviewing specialty programs available to design-build contractors alongside the commercial insurance program is a practical starting point for confirming that the project insurance structure is appropriate for the delivery method your firm uses.

Ready to review your builder’s risk program for design-build work? The team at Tooher-Ferraris has been helping contractors and design-build firms structure appropriate project insurance programs since 1932. Contact us today to schedule a no-obligation consultation.