How Rising Tariffs Are Quietly Driving Up Insurance Costs in Construction

How Tariffs Ripple Into Insurance

When tariffs go up on critical building materials—like steel, aluminum, or lumber—the price of those materials increases. That doesn’t just affect your upfront project budget. It also affects how much it will cost to repair or replace those materials if there’s damage during construction. For insurers, higher rebuild costs mean higher claims. And that almost always translates into higher premiums.

But that’s only part of the picture.

Tariffs can also slow down the supply chain. When imported materials are harder to source or more expensive, contractors may need to find alternative suppliers or wait longer for deliveries. That stretches project timelines. And when a site remains under construction longer than planned, it increases the time it’s exposed to risk—fire, theft, vandalism, weather damage, you name it.

Builder’s Risk and GL: Where Costs Creep In

Let’s break this down into two areas where rising tariffs quietly push up insurance costs: Builder’s Risk and General Liability coverage.

Builder’s Risk policies are directly tied to the value of materials and the duration of the project. When tariffs drive up the cost of materials like steel or copper, the total insured value of the project increases. Insurers price premiums based on that value, so higher material costs mean more expensive coverage.

For example, let’s say a mid-size contractor is building a $50 million commercial property. If tariffs increase the cost of imported steel by 15%, that might bump the insured project value up by several million dollars. The insurer now has to price for that extra risk—and that gets passed down in the form of higher premiums.

Delays compound this. Tariffs can disrupt supply chains, forcing contractors to wait longer for key materials. That extends the build timeline, which means the builder’s risk policy has to be extended too. Insurers charge for those extensions—often at a higher rate because longer exposure equals more risk.

With General Liability (GL), delays can mean more days with workers and equipment on-site. That’s more chances for injury, damage, or third-party claims. The longer the exposure, the more it costs to cover. Here, the impact is more about time and activity. Longer projects mean workers, subcontractors, and heavy equipment are around longer. More time on-site raises the chances of an incident. And that’s exactly what insurers look at when adjusting premiums or setting terms.

For instance, a delayed project might require the GL policy to cover several extra months. That’s not just a formality—insurers may reprice that added coverage based on the extended exposure and the kinds of subcontractors involved. In some cases, they’ll even require additional documentation or endorsements to keep the policy in good standing.

In both cases, these added insurance costs aren’t just theoretical—they show up in project budgets, bid competitiveness, and margins. And for mid to large contractors juggling multiple projects across regions, even small premium increases can add up fast.

What This Means for Construction Leaders

For project managers, developers, and risk managers, this creates a double bind: costs are rising, and so are insurance requirements from lenders and owners, since they too are exposed to the increased risk of project duration, material costs, and labor. The pain can go in the opposite direction too – if insurance certificates are delayed or non-compliant, that can hold up payments, cause costly work stoppages, or even lead to contract breaches.

This is where a platform like Jones comes in. By using AI and software to streamline insurance compliance, we help construction companies keep projects moving, avoid insurance-related delays, and manage risk proactively. Our software helps you track certificate validity, ensure subcontractor compliance in real-time, and respond quickly when insurers tighten requirements due to macroeconomic trends like tariffs. And since this is all tied into Procore and other systems, you can ensure projects are running as smoothly as possible through our turnkey product integration.

Bottom Line

Rising tariffs may feel like a policy issue far from the job site—but their impact hits close to home in construction. They raise material costs, slow projects down, and push insurance premiums higher. In this environment, staying ahead of insurance compliance is more important than ever—and AI-powered tools like Jones can help make that a competitive advantage.

Tired of Reviewing COIs and Endorsements Manually?

Jones automates the collection and review of COIs for property management companies, owner-operators, and general contractors across the US. Reach out to us via the form below to find out more about how Jones can help your organization manage your insurance documents.