“Sending information into a broker and getting a quote is not going to get construction companies the results they want.” That’s the blunt assessment from Chelsi Hobbs (pictured), a commercial lines producer at CoVerica, on what she sees as a growing disconnect between coverage expectations and insurance realities in the construction sector.
With project costs and liability risks on the rise, Hobbs said many firms still prioritize premiums over properly aligning policies with operational exposure. “There is no one-size-fits-all insurance program,” she said. “Every company has different wants, needs, and the capacity to get there.”
At the center of the issue is a persistent gap in understanding how insurance programs are structured – and what’s often left out.
“Many still think [sending information in for a quote] is the way to do it, and that’s okay,” Hobbs said. “But they will not get the results they desire. We see that daily.”
Errors in the early quoting process can carry long-term consequences. Hobbs pointed to builders' risk and general liability policies written with incomplete or inaccurate details. Misidentified insured entities and unclear ownership of builders' risk policies are common, and can lead to denied claims.
Equally concerning, some firms take on projects not covered by existing liability policies. “They’re taking jobs that aren’t necessarily covered by their current policies,” Hobbs said. “In Texas, for example, residential exclusions are very prevalent due to the volume of construction defect claims related to tract homes.”
The widening scope of liability claims has exposed the limitations of a transactional approach. Hobbs said that without a clear understanding of how a business operates – its risk tolerance, safety protocols, and subcontractor usage – insurance programs are often mismatched with true exposure.
“If we don’t know how a company operates, we can’t accurately advise or structure their program correctly,” she said.
Beyond policy placement, Hobbs stressed the importance of aligning operations with what insurers look for in a lower-risk account. This includes documented safety practices, internal claim procedures, and defined responsibilities in subcontractor agreements.
She described this as building toward a “best-in-class” profile – a concept tied less to size than to clarity, documentation, and consistency. “These companies are less likely to face major claims and are better positioned to respond when one occurs,” she said.
Rising demand and labor shortages have led more firms to rely on subcontractors, often with limited documentation. Hobbs noted that handshake agreements remain widespread, but they pose growing risks.
“Insurers are enforcing subcontractor contracts and insurance requirements, asking for proof, auditing, and inspecting,” she said. “That handshake? If it is accepted, it comes with a higher premium and doesn’t help if a claim arises.”
Another under-addressed exposure: commercial vehicle use. Hobbs pointed to a rise in frequency and severity of business auto claims – many of which, she noted, are preventable.
“Plaintiff attorneys are taking companies to the bank,” she said. “Many of these cases could have been avoided with basic dash cams – inside and outside the vehicle – or regular MVR testing.”
The sharp increase in auto-related nuclear verdicts has had ripple effects across all commercial lines. For construction firms, the takeaway is not just about adjusting policy language – it’s about managing risk before a claim ever occurs.
“We want to be seen as part of the planning process – someone clients can talk to before signing contracts or expanding operations – not just as the person who handles policies,” Hobbs said.
The message is clear: in today’s legal and regulatory environment, insurance cannot function as a backstop. It must be a tool in a broader, better-documented strategy to manage risk, before the courtroom enters the picture.
