Tariffs and supply pressure pushed construction material costs sharply higher in 2026. The Associated General Contractors of America reported aluminum mill shapes up 33 percent year over year, steel mill products up 20.7 percent, and copper up 15.7 percent. Builder's risk, tool, and equipment policies pay up to the limit you set, so values set in 2024 or 2025 may no longer cover a full replacement. Update limits at renewal and whenever project costs change. Coverage depends on your policy terms.
Material Prices Moved Faster Than Most Policies
Construction materials got more expensive in 2026. The Associated General Contractors of America reported these year-over-year jumps:
| Material | Year-over-year change |
|---|---|
| Aluminum mill shapes | +33% |
| Steel mill products | +20.7% |
| Copper | +15.7% |
Industry estimates put the overall tariff-driven increase in construction material costs in the mid-single digits, but trades heavy in metal, wire, and pipe feel much more than that.
Insurance limits do not update themselves. If you set your builder's risk value, your tool schedule, or your equipment limits in 2024 or 2025, they may be well short of what a total loss would cost today.
How Underinsurance Actually Hurts You
Builder's risk and inland marine policies pay up to the limit you chose. If a fire destroys a framed building and rebuilding now costs more than the policy limit, the difference falls on you or on the owner, depending on the contract.
Some policies also contain a coinsurance or reporting condition. If values were materially understated, the carrier can reduce what it pays on a partial loss too, not just a total loss. Read the valuation section of your policy, or ask your broker to walk you through it.
Rates Down, Premiums Up
Several 2026 market reports describe builder's risk rates softening in non-catastrophe regions. That sounds like good news, and it is. But premium is rate multiplied by insured value. When values climb faster than rates fall, the total bill still goes up.
The mistake is cutting the insured value to keep the premium flat. That trades a predictable premium for an unpredictable, uninsured loss.
A Ten-Minute Coverage Check
- Builder's risk: Compare each active project's insured value to its current estimated completed value, including approved change orders.
- Tools and equipment: Pull your inland marine schedule. Update the replacement value of every item you would have to buy new today.
- Stored materials: Check whether materials in transit or stored off-site are covered, and up to what amount. Higher prices mean higher values sitting in yards and trailers.
- Contracts: Confirm who carries builder's risk on each job and what value the contract requires.
- Theft exposure: Copper and metal theft rises with metal prices. Confirm theft is covered, check any sublimits, and document site security.
Fix It Before a Loss
Limits can almost always be raised by endorsement during the policy term, but never after a loss. If any number in your check above looks stale, call your broker now.
Construction Pros writes builder's risk and inland marine for contractors in California, Nevada, Arizona, and Texas. Get a free builder's risk quote, or learn more about builder's risk and tools and equipment coverage.
Frequently Asked Questions
How do rising material costs affect builder's risk insurance?
Builder's risk pays to repair or rebuild covered work up to the policy limit, which is usually based on the project's completed value. If material costs rise after you set that value, a large loss can cost more to rebuild than the policy pays. The gap comes out of your pocket or the owner's.
Can I increase my builder's risk limit mid-project?
Usually, yes. Most carriers allow a limit increase by endorsement when the project value changes, such as a change order or a material price jump. It must be done before a loss. Some policies also include a small automatic increase, but you should not rely on it to cover a large gap.
Are rates going down while my premium goes up?
That can happen. Several 2026 market reports describe builder's risk rates softening in many regions, but premium is rate times insured value. When values climb faster than rates fall, the total premium still rises. Underinsuring to keep the premium flat is where contractors get hurt.
Does this affect my tools and equipment coverage too?
Yes. Inland marine policies for tools and equipment are usually written with scheduled values or a blanket limit. Replacement costs for equipment, trailers, and copper-heavy tools have risen. If your schedule has not been updated in two years, your limits may not replace what you actually own.