Overview: 

The Mass Timber Insurance Playbook (MTIP), co-authored by Philip Callow and Jim Glockling, adapted for the United States by Mike Hastings in collaboration with WoodWorks – Wood Products Council, and with contributions from Neutral, represents a groundbreaking resource in the field of mass timber construction. This comprehensive guide emerged from deep collaboration among insurance companies, brokers, developers, and mass timber experts to address the challenges faced when insuring mass timber buildings in the United States. As mass timber construction continues to gain momentum in the building industry, the MTIP serves as an essential roadmap for developers, contractors, insurers, and other stakeholders navigating the complexities of insuring these innovative structures. At its core, the playbook emphasizes a fundamental principle: successful insurance outcomes stem from viewing the relationship between insurers and the insured as a strategic partnership rather than a mere transaction. This approach, combined with the playbook's detailed guidance, aims to facilitate the large-scale adoption of mass timber while ensuring mass timber buildings remain insurable throughout their lifecycle.

‍

The Risk Landscape 

The risk landscape for mass timber buildings presents a complex set of challenges that require careful consideration and strategic planning. Drawing from the Mass Timber Insurance Playbook and Neutral's real-world project experiences, several key risk factors emerge that shape the insurance landscape for these innovative structures.

Mass timber's unique properties as a building material create distinct insurance considerations. The material is combustible and hygroscopic, meaning it can burn and absorb moisture. However, mass timber's fire performance differs from that of other combustible materials like steel and concrete due to a scientific process called wood charing, sometimes called char layer, which provides a degree of natural fire protection. Despite this beneficial characteristic, insurers typically view all mass timber fire losses as catastrophic due to limited loss history data for mass timber buildings, leading to conservative underwriting approaches. This is because the loss runs (i.e., insurable loss history) are very limited, and insurance companies do not like unknown risks.

To mitigate the lack of loss runs, insurance companies require above and beyond-safety measures and protocols that otherwise would not be required for noncombustible construction like steel or concrete:

1. A moisture management plan (MMP) becomes paramount, as mass timber's hygroscopic nature requires careful protection during transport, storage, and installation. Insurers typically need a comprehensive MMP to minimize hygroscopic risk exposure.
2. Site security is paramount during construction, particularly before sprinkler systems and passive fire protection measures are in place. Neutral has partnered with LVT Site Security to meet its security needs. 
3. The regulatory landscape adds another layer of complexity. Projects must navigate varying building codes and approval processes, which affect insurance coverage. For example, Neutral’s Bakers Place project in Wisconsin required approval by the City of Madison to use the 2021 IBC Type IV-B standards and needed a city variance to allow for this since the State of Wisconsin, at the time of approval, was still operating within the 2015 IBC, which had no provision for mass timber above five stories.
4. Insurance companies emphasize the experience and qualifications of the development and construction team members. The selection of experienced mass timber fabricators and erectors can directly impact insurance rates and availability. For instance, Neutral's Bakers Place project demonstrated how choosing experienced fabricators like KLH and Wiehag and an experienced erector, C.D. Smith Construction, helped lower risk ratings and decrease insurance rates.

This complex risk landscape emphasizes the importance of early planning and continuous risk management throughout the building's development lifecycle. Success requires viewing insurance as a strategic partnership rather than an expensive requirement, with open communication and collaboration among all stakeholders from initial concept design through ongoing building operations.

‍

The Process 

Securing builders' risk insurance for mass timber projects requires extensive documentation and early engagement with insurance carriers. Insurance companies require comprehensive documentation before providing coverage, including detailed moisture management plans, site security protocols, fire prevention strategies, construction sequencing, team qualifications, code compliance documentation, list of contractors, desired mass timber fabricators, third-party testing reports, structural calculations, project timelines, and, at a minimum, schematic design drawings from all consultants.

Early engagement with insurance carriers typically begins 10-14 months before construction. During this initial phase, developers share preliminary project details with their insurance broker to identify potential carriers with mass timber experience. The preliminary submission phase follows 8-10 months before construction, where the team submits initial documentation and arranges introductory meetings with potential carriers. A technical review phase occurs 4-8 months before construction once schematic design drawings from all consultants are complete, involving detailed analysis of plans and specifications, engineering review, risk assessment, and refinement of safety protocols. The actual purchase of builders' risk insurance involves a structured market approach where the owner or the owner's broker engages multiple carriers to provide quotes. Neutral recommends starting with Zurich Insurance since they have a comprehensive mass timber insurance workbook to complete with the application. Given the specialized nature of mass timber construction, many projects utilize a quota-share arrangement where multiple carriers share the risk. Zurich has a standard builders' risk agreement that other carriers like CNA, Chubb, AXA, and others have already preapproved, so the owner does not have to go through multiple contract negotiations using different builders' risk agreement forms.

The quote process requires submission of the final documentation package, after which carriers provide preliminary pricing and negotiate terms and conditions. Success in securing favorable coverage terms depends heavily on complete documentation, early carrier engagement, demonstrated team experience, transparent risk management protocols, strong broker relationships, and flexibility in policy structure. The final negotiation process addresses coverage terms, premium allocation (particularly in quota-share arrangements), deductible levels, payment schedules, policy duration, and extension provisions. Throughout this process, maintaining open communication and promptly responding to carrier inquiries helps build confidence and can lead to more favorable terms. Regular updates and documentation of risk management implementation during construction strengthen the relationship with carriers and facilitate easier renewal, extension, and subsequent coverage on future projects.

‍

Long-term Management 

Transitioning from builders' risk to permanent property insurance requires careful planning and strategic implementation of operational protocols. The property insurance market for mass timber buildings remains relatively limited, making early engagement with potential permanent carriers essential, ideally beginning 6-9 months before the certificate of occupancy (CO). Demonstrating sophisticated building management systems and protocols is critical to obtaining favorable permanent coverage. These typically include continuous moisture monitoring with automated alerts, regular thermal imaging inspections, comprehensive maintenance programs, and documented emergency response procedures. The building must maintain detailed service records, conduct regular staff training, and establish protocols for tenant improvements or modifications. Insurance carriers emphasize the property management team's experience with mass timber buildings and ability to execute established monitoring and maintenance protocols. Implementing advanced leak detection systems, automated water shutoffs, a secondary water main in the event of a fire, and redundant fire protection measures has effectively reduced insurance premiums. Regular engagement with local fire departments for building familiarization and emergency response planning also helps strengthen the risk management profile. Success in long-term management requires viewing these protocols as insurance requirements and as essential components of maintaining the building's value and performance over time.

‍

Conclusion

Mass timber construction presents unique insurance challenges that can be effectively managed through careful planning, comprehensive risk management, and sustained attention to building performance. Success requires viewing insurance as an integral part of project development rather than a futile consideration. Download the Mass Timber Insurance Playbook (MTIP) using the link below to learn more about best practices for insuring mass timber buildings. This comprehensive resource, developed in collaboration with industry experts and WoodWorks, provides detailed guidance on risk management strategies, documentation requirements, and operational protocols that help ensure mass timber projects remain insurable and resilient throughout their lifecycle.

‍