As the construction industry continues to rebound from the recession, contractors face evolving risks that, left unchecked, can leave their operations exposed to new liabilities.
If you already operate a construction firm, you know that there is a labor shortage that has affected the makeup of your workforce, and that hiring entities are asking builders to take on more of the design function as well. Finally, construction firms must contend with cyber-security risks if they are using technology in their operations.
Accounting for these risks in your risk management strategy as well as ensuring you have the proper insurance coverage is key to protecting your firm from these evolving risks. Here’s a deep dive into three of those risks.
Lack of qualified workers
The construction industry has been wrestling with a labor shortage since before the COVID-19 pandemic, a shortage that’s been exacerbated by the immigration raids carried out by Immigration and Customs Enforcement in 2025.
Approximately 439,000 new workers are needed by the construction industry in 2025 to meet demand and potentially 499,000 in 2026, according to Associated Builders and Contractors.
Now, as home construction starts growing again, many contractors are having a hard time finding qualified workers, as well as project managers, engineers and estimators. That means workers are likely taking on greater workloads, which puts them at risk of injury or making mistakes. It also means longer project times.
Also, contractors have more inexperienced workers in their ranks who are not as aware of workplace safety and lack the experience to identify hazards, which puts them and others at risk of injury.
Professional liability risks
As more project owners want an all-in-one job with the lead contractors designing and building the project, those construction firms now face a new type of risk: professional liability.
The problem is that the typical contractor’s insurance policy doesn’t provide protection for any design work they may take on. If they do design a project, even partially, they’re not absolved of liability if they farm the actual construction work out to a subcontractor.
Courts have found that designers who cross over and perform traditional “builder activities” lose any limitation of liability traditionally enjoyed by design professionals. Builders who cross over and perform “design activities” assume responsibility for design deficiencies and can no longer push that liability to the design professional.
Cyber-security risks emerge
Like all industries, the construction sector has grown increasingly reliant on technology to get the job done. There are numerous solutions in the market that can help optimize workflows and save companies time and money.
While a construction firm is likely not going to keep clients’ credit card information on its website or databases (data that hackers drool over), they do keep confidential information on project designs as well as on employee records.
Recently, a contractor foreman stepped away from his work-issued laptop at a café and upon returning saw that it had been stolen. The laptop contained confidential company information and building information, like modeling construction and design methods.
More building contracts today include confidentiality agreements that require the contractor to be responsible for potential breaches associated with their activities, and that was the case in this instance.
While it was unclear if vital company secrets were exposed, the breach required that the owner’s 2,300 current and former employees be notified that their personal information may have been exposed.
Under the terms of their contract, the contractor was also obligated to pay for credit monitoring to all those employees for a year.
There was no indication that the information was ever exposed, but the notification costs and credit monitoring cost the company $25,000 out of pocket.
The takeaway
As contractors’ risks evolve, it’s important that you discuss any changes to your operations when we are helping you renew your insurance policies. We can help you discern if you need additional coverages like cyber and professional liability to ensure that these risks are covered.
Tags: Construction, Leaders' Choice Insurance Services