Consequences of Decreases in Building Activity

Contractor Insurance

Decreases often trigger a rise in losses

According to Insurance Journal Magazine, dramatic increases or decreases in residential and commercial building activity growth could trigger a rise in construction defect or Workers’ Compensation claims.

States that are noted to be in the danger zone for underwriters based on current dramatic decreases in construction activity growth include New Jersey, Kentucky, Louisiana, Florida and Mississippi.

While the article does not speculate the reasons for such increased losses due to changes in growth, two common reasons are most often cited by other experts:

  • A rapid increase in construction growth is normally associated with an increase in construction defect claims due to an influx of inexperienced contractors in the market.
  • A rapid decrease in construction growth is normally associated with an increase in Workers’ Compensation claims because workers often become disgruntled due to layoffs or cut backs and file Workers’ Compensation claims in retaliation as a way to make up for income loss.
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