Technological advancements in the construction industry have not only led to innovation, but also increased efficiency, safety, and cost-effectiveness. However, they come with the introduction of a full new set of risks. These new risks mean contractors’ insurance needs are evolving—coverages are due for reassessment to ensure they’re adequately protecting against these risks.
In this blog, we’ll explore how advancements in construction technology and innovation are reshaping the industry and, in turn, impacting insurance requirements. From the adoption of smart materials to the use of automation and AI, these changes are creating new opportunities and challenges for businesses. We’ll also discuss key considerations that companies should consider to stay compliant and protected in this evolving landscape.
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How Technology in Construction Is Increasing Cybersecurity Risks
There has been an increased adoption of smart contracts, digital blueprints and cloud-based project management software. These digital tools have revolutionized how the construction industry manages projects. However, this has also led to contractors becoming more vulnerable to cyber threats.
One cyberattack can cause significant financial losses, legal liability, and reputation harm. Cyber Insurance is crucial for contractors to consider. A robust cyber policy will protect for the following:
- Ransomware and extortion costs
- Data breaches and loss of valuable and sensitive information
- Business interruption due to the attack
Cybercrime is on the increase within the construction industry, with a 48% increase in cyber attacks from 2022 to 2023. In addition, a report ranked the construction industry as the number one targeted industry. It’s more critical than ever for contractors to build a robust cyber protection program.
Innovation in Construction Leading to Rise in Automation
The building technology shows how automation brings a clear benefit to the construction industry. Its latest innovation, automatic brick layers, not only reduces labour costs but also human error.
Increased precision and efficiency can lead to several risks, such as software malfunctions, safety concerns, and even equipment failure. If a contractor uses robots or any form of automation in their construction projects, they’ll need to consider the following insurance adjustments:
- Equipment breakdown Insurance to take care of any unexpected failures
- Increased liability limits to cover damages to third-party property caused by faulty equipment
Contractors should also consider the difficulties that may come into play when robotic equipment is repaired or pieces replaced due to the niche nature of the items.
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Modular Construction in Building Technology
There has been a large boom in modular construction, with the market share growing at a 6.7% rate per year. This shift has increased offsite manufacturing, leading to lower construction costs, reduced waste, and increased efficiency.
This shift from working on a job site to a manufacturing facility has changed the risk. Contractors should consider expanding their coverage to include:
- Cargo Insurance: This will provide additional coverage while the construction materials are being transported
- Property in Transit coverage: This coverage is regarding damage caused during the storage or transportation of the prefabricated portions of the home during the construction process
Many contractors' policies may already carry the coverage above. However, those limits tend to be low and may not consider the gravity of the contractor risks.
Technology in Construction Leading to Smart Construction Sites
The Internet of Things has played a significant role in the construction industry. Smart Sensors and connected machinery have improved the management of construction projects. This has led to better use of construction materials, especially when we look at complex construction projects.
The implementation of these construction technologies introduces many challenges that need to be considered when looking at your insurance:
- IoT system failure coverage: This will provide protection should there be a financial loss due to the malfunctioning technology
- Increase liability limits: This will help ease the worry of a potential claim arising from an IoT system failure, causing a safety measure to not work appropriately
The construction sector has had a major influx of technology, with construction professionals embracing the benefits it brings. Those who rely on the IoT have seen a 29% reduction in costs.
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Rely on KASE Insurance for Up-to-date Coverage
Innovation in the construction industry continues to shape the field, one invention at a time. It has improved worker safety, enabled sustainable practices, and increased success in completing complex construction projects. For construction companies, this means setting themselves apart by embracing new technologies that provide innovative solutions and optimize project management.
At KASE Insurance, we believe innovation is the mother of necessity. We’re here to be your risk management partner. Allow us to help you stay protected—we’ll review your policy, visit your construction sites, and take the time to learn the ins and outs of your construction business to provide improved protection and coverage.
A contractor focused on construction innovation should be partnered with a tech-driven brokerage. Contact us today, and we'll help you navigate the changing construction landscape while safeguarding your business.