Insurance survey proves underwriters wise to wood-frame construction risks

Sources: National Ready Mixed Concrete Association, Silver Spring, Md.; CP staff

A new NRMCA-commissioned study proves how builder’s risk (construction phase) and commercial property (occupancy phase) insurance rates, measured across a wide range of regions, trend lower for multifamily dwellings built of concrete versus wood.

In “Survey of Insurance Costs for Multifamily Buildings Constructed with Wood frames and Concrete,” Boston College’s Dr. Pieter VanderWerf and Nicholas Haidari obtained builder’s risk and commercial property insurance premium quotes for a reference building of combustible (wood-frame) and noncombustible (concrete) construction, located in Edgewater, N.J.; Towson, Md., Orlando, Fla., Dallas or Los Angeles. While the extent of savings for a concrete building varied widely for builder’s risk insurance quotes, it was within the range of 22-72 percent for all regions; for commercial property coverage, quoted savings were within the 14-65 percent range.

“This study validates what has long been the assumption when it comes to the hidden costs of certain types of buildings,” says Kevin Lawlor, a spokesperson for the NRMCA-led Build with Strength coalition of fire service professionals, engineers, architects, and industry experts committed to stronger building codes. “At a time when multifamily residential building fires are a seemingly common occurrence, concrete’s durability in the face of such threats has resulted in a marked difference in terms of insurance costs.

“Concrete buildings cost less to insure because they’re not going to combust, and they’re less prone to degradation over the lifespan of the structure,” he adds. “It’s only logical insurance rates would reflect that durability.”

Throughout 2017, Build with Strength members have tracked fires in multifamily complexes constructed from wood, including properties in Lakewood and Maplewood, N.J.; Dorchester, Haverhill, Lowell, Waltham and Weymouth, Mass; Charlotte and Raleigh, N.C.; Warner Robins, Ga.; Midvale, Utah; East Hollywood, Emeryville and Oakland, Calif.; Waterbury, Conn.; St. Petersburg, Fla.; Arlington, Va.; College Park, Md.; and, Overland Park, Kan.