With interest rates on the rise, sticky inflation, few signs of a cooling labor market, and continued instability in Russia, China and beyond affecting energy prices and exports, the builder’s risk insurance industry is in store for more complex claims in 2023.

Builder’s risk insurance may be purchased by owners and contractors to insure against physical loss or damage to a project during construction.

This type of insurance can include coverage for hard costs, soft costs and time element loss -- lost income or rent due to physical loss or damage.

Hard costs, or repair costs, may be relatively easy to calculate depending on the scope of damage.

Soft costs, on the other hand, can be more complicated and often include a variety of expenses associated with project delay, such as additional taxes; architect, engineer or consultant fees; permitting costs; insurance premiums; and interest on construction loans.