Essential insights for insurers on mass timber buildings

Mass timber construction for residential and commercial buildings is far from a new technology but it may still be unfamiliar to some in the insurance industry.

The key issues are risk and data. Insurance of any sort — including occupancy and builder’s risk insurance — is rooted in assessing risk, and insurers use past data to do so (of which there are next to zero claims for mass timber buildings to use as a reference).

As most such data is based on steel, concrete or light wood frame buildings, it can be difficult to assign risk to a policy for a mass timber building. Indeed, while steel and concrete construction remains dominant, Canada has just over 800 completed mass timber buildings and the U.S. just over 2,000, with approximately 200 and 600 respectively erected in the last five years. (For more details about North America’s portfolio of mass timber buildings visit the Interactive Map of Mass Timber in Canada and Mapping Mass Timber in the US.)

This data disproportion can affect an insurer’s decision whether to provide coverage and how much to charge.

Here are some common misconceptions about mass timber that insurers need to understand so they can serve existing clients, attract new customers and build successful long-term relationships with owners/developers in the mass timber space.

Mass timber construction is not the same as building with dimensional lumber 

The Canadian Wood Council notes that while building codes in Canada and the U.S. are evolving to address newer types of construction, builder’s risk insurance terms have not advanced along with construction and codes.

According to the Insuring Timber Initiative, “Historical risk assessment data available is largely focused on light wood frame structures such as homes; but there are significant differences that exist for larger buildings that use mass timber as structural elements.”

Annabelle Hamilton, MSc and technical manager, planning and development with WoodWorks BC, says: “It’s important to decouple what mass timber means because it doesn’t perform the same as a light-frame building does. There are other factors that need to be considered.” She also notes that while mass timber and light wood frame buildings perform differently, they currently fall into the same insurance classification.

Mass timber is proving to be fire safe

Fire is, predictably, a key and understandable concern of insurers regarding mass timber construction but there is a substantial and growing body of international evidence of its fire-resistant properties.

“There is a misconception that [mass] timber is more vulnerable to fire,” according to the Insuring Timber report. “In fact, numerous tests have been done that prove mass timber can achieve 2+ hour fire resistance ratings and meet or exceed the standards of building codes.”

In 2022, for example, the National Research Council of Canada conducted a series of five tests on a mass timber structure in Ottawa, Ont. in front of more than 150 experts from across Canada, including fire officials, building regulators and insurance industry representatives. In the first, a room with exposed mass timber ceiling, beams and columns, and a typical office layout, was set ablaze. Once the room’s contents were consumed, however, the fire quickly died down and burned out, according to the report, which noted: “The fire on the burning structural elements largely self-extinguished within the first hour” — and that was without any water or fire-suppression efforts.

Tim Buhler, director, programs and operations, with Canadian Wood Council, notes, “It’s important to differentiate the fact that these are much larger, engineered wood members and they’re self-protecting, in a way, through very predictable charring that’s limited to the surface.”

Mass Timber Demonstration Fire Test Program | Photo courtesy of Canadian Wood Council

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Protecting engineered wood from water

Moisture or water damage is the primary concern of those unfamiliar with mass timber construction. This can include both exposure to the elements during construction and potential problems during occupancy such as burst pipes.

Buhler says when it comes to floors, where water might collect, “There’s a misunderstanding about what mass timber assembly looks like… Nobody talks about the waterproofing membrane, the acoustical topping, the vibration mitigation, the concrete or other materials that are used and sit on top of it. So, if there’s sprinkler activation, the water’s not directly on wood.”

Mass timber builders can make mitigations part of their design, including the use of floor drains as well as misting sprinklers that spread a third of the water of conventional sprinkler systems but are just as effective in fire suppression.

But limiting exposure to moisture starts in the planning stage and is critical during construction. The speed of construction/assembly using prefabricated mass timber panels, beams and other elements aids in reducing exposure during the construction process. The quicker a building is vertically erected (especially the exterior envelope), the sooner the roof and walls also go up, providing protection from the elements.

Repairing and replacing when mass timber is damaged

If a mass timber product does experience damage due to fire or water, what’s next?

Hamilton acknowledges that there are fewer data points available for repairs of mass timber buildings than there are for concrete and steel or even light wood framed structures while Buhler notes that, in case of fire, the thin charred layer on, for instance, a mass timber panel or beam can be repaired in place (however further research is required).

One section of the Insuring Timber report titled “Debunking Timber Myths” states that “Options vary depending on the severity of the damage but can be as simple as sanding damaged areas or as complex as replacing large sections.”

Canadian Wood Council’s publication A Guideline for Insuring Timber in Canada notes that repair and rehabilitation of mass timber buildings is a concern for the insurance industry not because of concerns about susceptibility to damage, but because of the unknowns regarding repair costs. “The insurance industry has thousands of historical claims for light wood frame houses and other small buildings, but little data for larger wood and mass timber buildings.”

Protecting mass timber under construction

The insurance industry can also improve its understanding of risk issues around mass timber projects while they’re under construction, when builder’s risk or course of construction insurance is needed. That’s where builders can take simple, inexpensive and effective steps to ensure safety on site, says Buhler.

He notes that insurers can seek out information from their clients on how the site is to be protected from water or fire damage while under construction so they recognise the likelihood of an incident occurring and can adequately assess risk. In addition to having basic fire protections and water-control and -management plans in place, he says, those steps include having onsite security, especially overnight, as well as secure hoarding and regular waste disposal to remove potential fire fuel — similar to protections required in steel and concrete construction.

The benefit of mass timber’s quicker assembly does also reduce the risk of injury onsite.

Buhler notes these small investments in site security can pay big dividends in reducing risk of loss, so any insurance company working with mass timber owners/builders must have this information to make the best assessment possible for both its customers and its bottom line.

To learn more about insuring mass timber from the perspective of a building owner or developer, check out Top tips for insuring your next mass timber building.