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Tariff-driven construction cost inflation can raise wrap-up premiums
Producers’ prices for aluminum and steel rose 33% and 20.7% year over year, pushing wrap-up programs to face additional premium at final audit if project costs climb.
Construction cost inflation is emerging as a key source of audit risk for brokers that manage wrap-up insurance programs tied to major projects, according to Insurance Business.
The outlet cited pricing data showing aluminum producer prices up 33% and steel up 20.7% year over year as of January 2026, and said tariff-driven higher inputs make it harder to set an accurate construction cost figure at the time coverage is bound.
While the liability coverage is described as holding even if project costs rise, the mechanism for the impact changes. Jencap wrap-up construction practice co-leaders Kris Bauer and Michael Yovino said there is generally no liability coverage gap, but an additional premium often becomes due at final audit because the initial policy rate applies to the increased costs above the original estimate.
They also noted a different risk on the property and course of construction side, where material cost overruns can trigger coinsurance issues. Bauer and Yovino said carriers have not changed underwriting approaches or introduced tariff-specific pricing mechanisms, so the broker and insured need to address mitigation steps at program inception.