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. And that lack of knowledge can result in roadblocks — challenges getting both occupancy and builder’s risk insurance. For building owners and developers aiming to create structures that make the most of mass timber’s advantages in speed of construction, low carbon impact, comfort and beauty, insurance premiums can be five to seven times higher compared to traditional steel or concrete buildings.
The key issues are risk and data. Insurance of any sort is rooted in assessing risk, and the insurance industry uses data from past experiences. As most past data is based on steel, concrete or light wood frame buildings, it is difficult to assign risk to a policy for a mass timber building. This impacts the insurer’s decision whether to provide coverage and how much to charge. While steel and concrete construction is still 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.
Both building owners/developers and insurers have roles to play in building successful long-term relationships as well as properly insuring mass timber buildings.
Here are some common misconceptions about mass timber that building owners/developers can help debunk for insurers.