Mass timber construction is increasingly being adopted across Canada, driven by sustainability goals, government incentives and design innovation. But while developer interest is accelerating, insurance underwriting has yet to align with this shift. Uncertainty around water damage, repair timelines and aesthetic restoration continues to complicate coverage and pricing, creating a disconnect between project ambition and insurability.
With specialized expertise serving the construction industry across Canada, Acera Insurance’s Jonathan Livingstone provides his expert insights into how mass timber projects are insured today and what developers can do to navigate coverage requirements and underwriting expectations.
For many developers, mass timber represents an opportunity to differentiate projects through sustainability, design and construction efficiency. However, as more projects move from concept to execution, insurance has emerged as a key friction point.
Limited claims history, uncertainty around repair outcomes and heightened concern over water damage mean coverage is often more complex than expected. As a result, insurance terms are shaped not just by design intent, but by fabrication practices, transportation controls, sequencing and contractor experience.
Developers who understand how insurers assess these factors and address them early are better positioned to secure coverage and avoid late‑stage pivots back to conventional materials.
What insurance coverage is required for mass timber construction?
Mass timber construction does not introduce entirely new insurance requirements. The same types of coverage typical to other commercial projects would apply but the difference lies in how those policies are underwritten and structured. Insurers will take a more cautious approach, and custom wording may be warranted.
Builders’ risk (course of construction)
Builders’ risk or course of construction insurance covers physical loss or damage during a building’s construction. For mass timber projects, insurers will pay particular attention to how elements are manufactured, stored, transported and protected on site. Water damage, off-site fabrication and aesthetic restoration are all issues that are subject to heavy negotiation in policy wording.
Commercial general liability (CGL)
In the event your business is sued for causing injury or property damage, commercial general liability (CGL) covers legal expenses and any resulting judgments. On larger projects, CGL is often placed via an owner-controlled insurance program (OCIP) or contractor-controlled insurance program (CCIP), which consolidates coverage for all trades under one policy. Also known as wrap-up liability insurance, this ensures consistent limits and avoids coverage gaps.
Excess and umbrella liability
If a serious claim exceeds the limits of your primary policy, excess and umbrella liability provides an additional layer of liability coverage. Higher limits are often required for mass timber projects because losses can be more complex and costly, particularly where exposed timber is part of the finished design.
Professional liability (project‑specific or practice policies)
Professional liability protects against claims that advice or services you provided caused financial losses. This is particularly relevant in mass timber construction where performance and long-term durability depends on moisture management, detailing or hybrid structural systems. Coverage may sit within a firm’s policy covering all projects or be arranged as a project‑specific policy for a single development.
Delay in completion/delay in start‑up (DSU)
This is often added to builders’ risk insurance, covering lost revenue or additional financing costs if a project is delayed by insured physical damage. The potential for delays is a heightened concern for mass timber due to long and unpredictable drying and repair timelines.
Why does mass timber construction require different insurance underwriting?
Mass timber construction presents a data challenge for insurers. With limited historical loss experience to draw on, underwriters must assess risk without the benefit of long‑term performance trends or well‑established claims patterns. This data gap means underwriting remains conservative, particularly around loss severity, remediation and durability over time.
Why carriers focus on water and fire
Fire remains a significant concern, particularly where exposed or visual timber elements are integral to the design. While insurers generally understand how mass timber behaves in fire thanks to predictable charring characteristics, there is still uncertainty around post-fire damage, repair feasibility and the cost to remove and replace damaged components.
At the same time, water damage has emerged as a leading loss driver for mass timber projects during construction. Water can penetrate deeply into panels, become trapped and lead to latent damage that may not be immediately visible or easily assessed.
Why exposed aesthetics change loss severity
Unlike steel or concrete, mass timber often serves as both structure and finished surface. Water staining, checking or microbial growth may not compromise structural capacity but can still render panels unacceptable from an architectural standpoint. In these cases, relatively minor leaks can escalate into significant claims.
Why repair time uncertainty affects pricing
One of the biggest challenges for underwriting mass timber is the variables around remediation. Insurers struggle to model:
- How long thick panels take to dry
- Whether drying is acceptable versus replacement
- Whether hidden moisture leads to future degradation
This lack of clarity increases loss severity assumptions, driving higher deductibles, the inclusion of sub-limits, or exclusions if risk controls are weak.
Builders’ risk insurance for mass timber construction: Coverage considerations
Unlike conventional construction, mass timber introduces exposures that begin long before installation and extend through the most vulnerable stages of construction. As a result, insurers place particular emphasis on early planning, clear policy wording and documented controls, all of which can materially affect how coverage responds and whether a project remains insurable on acceptable terms.
Aesthetic timber repair vs. replacement
Mass timber claims often hinge on whether insurers will pay for:
- Sanding and refinishing
- Panel replacement due to staining alone
This is policy‑specific and should be negotiated upfront with insurers, not after a loss.
Off‑site fabrication and storage
Mass timber elements are frequently manufactured off‑site. Builders’ risk insurance must clearly extend coverage to:
- Named fabrication facilities
- Storage yards
- Supplier locations
Insurers expect disclosure on how materials are protected, wrapped and kept dry while in storage before arriving on site.
Transit and staging exposure
Property damage occurring during transportation and on‑site staging is common. Policies should address:
- Inland marine extensions
- Time limits on uncovered outdoor storage
- Protective wrapping requirements
Temporary works and protection
Underwriters look closely at:
- Temporary roofing or membranes
- Sequencing that minimizes exposure
- Active dewatering and monitoring during erection phases
Projects that minimize the duration of exposed timber tend to be viewed more favourably.
Water damage wording (vs. flood)
Builders’ risk policy wordings will typically distinguish between water damage (escape of water, rain ingress, sprinkler discharge) and flood (surface water, rising water, overflow of natural bodies). Insurers often apply sub-limits for flood or exclude it entirely unless coverage is specifically added with an additional premium. These terms should be clearly defined within the policy.
Delay in completion/delay in start-up (DSU) insurance triggers
DSU coverage only responds to insured physical damage. Moisture that delays construction but does not meet the policy’s damage threshold may not trigger coverage, reinforcing the importance of clear definitions in policy wording.
Water damage risk in mass timber construction and how insurers respond
During construction, mass timber elements are often exposed before the building is fully enclosed. Even when damage appears minor, moisture can delay construction, complicate repairs or affect finished surfaces, all of which can have insurance and schedule implications. As a result, insurers closely examine when and how timber is exposed to water, what controls are in place to limit that exposure, and how moisture issues would be identified and addressed if they arise.
Top causes of water losses on mass timber sites
- Rain and snow during erection
- Plumbing leaks and early system activation
- Inadequate temporary weather protection
- Trapped moisture beneath toppings or membranes
Highest‑risk construction phases
- Panel installation before dry‑in
- Roof and floor assembly prior to permanent membranes
- Interior mechanical, electrical and plumbing (MEP) rough‑in before enclosure completion
Controls underwriters expect vs. prefer
Expected
- Formal Moisture Management Plan (MMP)
- Defined responsibility and monitoring protocols
- Sequencing that limits wet exposure
Preferred
- Factory‑applied protection
- Just‑in‑time delivery
- Moisture sensors and documented readings
Bridging mass timber innovation and insurance industry expectations
Mass timber construction presents meaningful opportunities for the construction industry, but insurance considerations continue to shape what is practical and achievable. Insurers assess risk across the full lifecycle of the materials, from fabrication and transport to installation and site protection. Developers who engage specialized insurance expertise early and align controls with underwriting expectations are better positioned to avoid delays and keep projects on track.
Connect with an Acera Insurance advisor to discuss mass timber construction insurance strategies and risk management.
FAQs
Acera Insurance’s Jonathan Livingstone answers five questions about insuring mass timber construction.
The difference has less to do with frequency and more about severity and uncertainty. Mass timber losses are harder to assess, remediate and price due to moisture sensitivity and aesthetic considerations. With a lack of historical data available for insurers to leverage, underwriting appetite and coverage terms can be more restrictive in comparison to more established construction types.
Key policy enhancements include coverage for off-site storage of materials, transit extensions and robust water damage wording. Clear policy language addressing repair versus replacement of exposed timber is also critical. Together, this aligns your coverage with the unique risks associated with fabrication, transport and installation of mass timber components.
Builders’ risk policy wordings usually define water damage as losses from internal or accidental sources, while flood involves rising or surface water. Coverage varies widely by wording and sub-limits may be applied, making it important to review definitions so you fully understand if and how these types of losses are covered under your policy.
Increasingly, yes. Many insurers now view an MMP as essential for insurability rather than a best practice. An effective MMP details how moisture exposure is assessed, addressed and monitored, demonstrating a proactive approach to risk management. This can reinforce confidence in your risk profile from an underwriter’s perspective and help secure more favourable terms, conditions and pricing.
Wrap‑up liability policies are most effective on large, complex or high‑value mass timber construction projects where consistent safety standards, limits and claims handling are critical. These programs can help control liability risk across multiple trades, but they must be carefully coordinated with builders’ risk insurance to avoid coverage gaps or overlaps.
Related reading
- Claims lessons Canadian businesses can’t ignore after $11 billion in severe weather losses
- Builder’s risk insurance: How to cover soft costs and avoid delays
Jonathan Livingstone is a Client Executive at Acera Insurance who specializes in insurance placements, program design and risk management for clients across the construction, real estate development and commercial sectors. Since joining Acera Insurance in 2022, he has worked closely with developers, contractors and business owners to structure insurance solutions that address complex operational risks and contractual requirements. Connect with Jonathan at 604.294.3773 or jonathan.livingstone@acera.ca
Information and services provided by Acera Insurance, Acera Benefits and any other tradename and/or subsidiary or affiliate of Acera Insurance Services Ltd. (“Acera”), should not be considered legal, tax, or financial advice. While we strive to provide accurate and up-to-date information, we recommend consulting a qualified financial planner, lawyer, accountant, tax advisor or other professional for advice specific to your situation. Tax, employment, pension, disability and investment laws and regulations vary by jurisdiction and are subject to change. Acera is not responsible for any decisions made based on the information provided.
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