Modular and prefabricated construction is reshaping the building industry. Once considered a niche approach, modular construction has gained widespread traction due to its efficiency, cost savings, and reduced environmental impact. The global modular and prefabricated construction market is projected to reach $173.44 billion by 2028, signaling a major shift in how projects are built.
While modular construction speeds up timelines and reduces on-site labor needs, it also introduces unique liability considerations. The risks associated with transporting, assembling, and integrating prefabricated units differ from those in traditional construction. For brokers working with artisan contractors in this space, understanding how general liability insurance for contractors adapts to modular and prefab projects is essential.
Key Liability Risks in Modular and Prefab Construction
The modular construction process shifts many risks from the job site to off-site manufacturing facilities, but liability doesn’t disappear — it simply takes a different form. Contractors working on modular projects face distinct exposures that need to be addressed within their general liability policies.
Property Damage From Prefab Unit Defects
Because modular components are preassembled off-site, any design or manufacturing flaws in the units themselves can result in liability claims. If a defective module is installed and later causes damage — such as structural instability or water intrusion — the contractor may be held responsible for the resulting property damage or costly repairs. These risks must be accounted for in modular construction insurance policies.
Site-Specific Hazards Vs. Factory Hazards
In traditional construction, liability risks stem primarily from on-site activities like framing, electrical work, and plumbing. In modular construction, a significant portion of the work happens off-site in controlled factory settings, shifting liability to manufacturing partners. However, once modules are transported to the job site, general contractors are responsible for installing units safely, securing them, and integrating the structure with existing components. This transition of liability requires careful consideration when structuring insurance coverage.
How General Liability Insurance Adapts to Modular Construction
Modular construction challenges traditional risk assessment models, requiring insurers to adjust policies accordingly.
Third-Party Property Damage Protection
Traditional construction sees liability primarily in the form of gradual worksite risks, but modular projects can introduce sudden, large-scale exposures. If a module is dropped, misaligned, or damages an adjacent structure during installation, contractors could face expensive property damage claims. Brokers must ensure their clients’ policies provide adequate third-party property damage protection specific to modular construction.
Completed Operations Considerations
Liability doesn’t end after modular building assembly. If defects in the prefab units or improper site integration lead to failures after project completion, contractors may still be responsible. Completed operations coverage plays a crucial role in mitigating these risks, extending liability protection beyond the construction phase.
Benefits of Working With Commodore Insurance
Commodore Insurance specializes in general liability insurance for contractors and provides solutions tailored to the evolving construction landscape. As a managing general agency (MGA), Commodore acts as a bridge between brokers and top-rated insurance carriers, offering streamlined access to policies that account for modular construction’s unique exposures.
Coverage Tailored to Modular and Prefab Work
With modular construction rapidly growing, contractors need liability policies that specifically address modular-related risks. Commodore Insurance works directly with brokers to ensure their clients receive coverage that accounts for:
- Site-specific risks versus factory-related exposures
- Third-party property damage
- Completed operations liability for modular construction defects
By working with Commodore, brokers gain access to specialized policies designed with modular contractors in mind.
Competitive Coverage Limits for High-Risk Projects
The financial scale of modular projects can be significant, making adequate liability limits essential. A single claim related to an improperly installed module or transport accident can lead to substantial financial exposure. Commodore ensures that policy limits are structured to match the needs of high-value prefab projects, providing peace of mind for both brokers and their clients.
Quick, Affordable Coverage
Fast, reliable quotes are essential for keeping projects on track. With Commodore’s online rater and streamlined application process, brokers can quickly generate competitive quotes and secure coverage for their clients. As an MGA and program manager, we simplify the process, making it easier to place contractor general liability insurance efficiently.
Adapting General Liability Insurance for the Modular Future
As modular and prefab construction continues to transform the industry, liability risks will evolve alongside these advancements. Brokers play a crucial role in helping contractors secure the right general liability insurance for contractors to navigate this changing landscape.
Understanding the nuances of modular construction insurance ensures that contractors have comprehensive protection, both on the job site and beyond. Contact Commodore Insurance today to explore tailored modular construction insurance for modular and prefab construction projects.
About Commodore Insurance
Commodore Insurance Services, Inc. (Commodore) is a California-based Managing General Agency and Program Manager specializing in insurance products for businesses across the West Coast. Since 1990, Commodore has been a trusted leader in small business insurance, providing brokers with competitive, comprehensive coverage solutions designed for high-risk industries.
