As the construction industry continues to benefit from strong demand for large projects, the insurance market is becoming increasingly selective. Insurers are drawing sharper distinctions between contractors with strong or challenged claims histories, according to a new report.

According to Aon’s “2026 Global Construction Insurance and Surety Market Report,” inflation, supply chain volatility, geopolitical uncertainty, cyber risk and growing catastrophe losses continue to influence pricing and underwriting. Across nearly every line of coverage, insurers are rewarding well-managed risks with stable pricing and ample capacity while scrutinizing accounts with poor loss experience, catastrophe exposure or elevated liability concerns.

Here’s a look at four main construction insurance lines.

 

Construction property

The construction property market remains one of the more stable segments. Capacity is generally plentiful, and pricing has softened modestly following a relatively mild catastrophe year. However, insurers remain focused on price adequacy and limiting natural catastrophe exposures.

Wildfire, severe convective storm, flood and earthquake exposures continue to drive underwriting decisions. While pricing for named windstorm, flood and earthquake risks has largely leveled off in many areas, contractors operating in high-hazard regions may face higher deductibles, tighter limits and more restrictive terms.

Water damage remains the leading source of routine construction losses, prompting underwriters to place greater emphasis on loss-control measures and technology designed to prevent or mitigate claims.

 

Construction casualty

The casualty market remains the most uneven segment of the construction insurance landscape. Commercial auto liability and physical damage rates continue to rise as insurers grapple with profitability and escalating claims costs. Contractors with large fleets, particularly in California, Florida, Georgia, Illinois, Louisiana and Texas, face challenging conditions.

General liability rates have been relatively stable for many commercial contractors, but heavy civil contractors, residential builders and firms with significant wildfire exposure continue to see higher rates and more restrictive underwriting.

Meanwhile, nuclear verdicts and social inflation continue to pressure excess liability markets. Insurers are deploying smaller limits, requiring higher attachment points and becoming more selective about the risks they support.

 

Professional liability

Professional liability conditions remain broadly stable for architects, engineers and contractors, particularly for organizations with fewer claims.

However, claims costs continue to rise due to inflation, higher defense costs and large verdicts. As a result, many carriers are pushing policyholders to take on higher deductibles and retain more risk, especially on large projects and loss-affected accounts.

Project-specific professional liability coverage remains available, but can be costly for megaprojects, where premiums often represent a significant percentage of policy limits.

 

Surety

The surety market remains one of the healthiest construction insurance lines. Strong infrastructure spending, data center construction and public-sector investment continue to support growth, while surety capacity remains adequate.

That said, insurers are starting to pay out more in claims in the mid-market construction sector due to:

• Rising supplier non-payments,
• Increasing performance defaults, and
• Growing contractor insolvencies.

 

As a result, surety underwriters are paying closer attention to financial statements, backlog management and aggregate exposure.

For financially strong contractors, rates remain stable and capacity is available. As project sizes continue to grow, however, sureties are increasingly focused on aggregate bonding capacity and the financial strength needed to support larger, more complex project portfolios.

 

The takeaway

While capacity remains available across most construction lines, insurers are becoming more selective. Contractors that want favorable rates will need to focus on risk management, sound financial management, effective fleet controls and disciplined project execution.

Tags: construction, Measured Risk Insurance