Miami Construction Insurance for Developers: What the Florida Litigation Crisis Means for Your Next Project

Florida’s construction insurance market has been punishing developers for the better part of five years. Builders risk rates that used to land at 1% of project value now regularly hit 3% to 4% in coastal Miami-Dade County, and several national carriers have pulled out of the Florida market entirely. If you’re breaking ground on a $50M+ project in South Florida, your insurance program isn’t just a line item — it’s a strategic decision that affects your construction loan, your subcontractor relationships, and your overall project feasibility.

We work with developers and general contractors across Miami-Dade, Broward, and Palm Beach counties. Here’s what our licensed construction insurance advisors are seeing in the current market and how to structure coverage that actually protects your project without destroying your pro forma.

• Builders risk premiums in Miami have roughly doubled since 2021 due to hurricane losses and litigation
• Florida accounts for approximately 76% of all insurance lawsuits nationally despite only 7% of claims
• Recent legislative reforms under SB 360 are beginning to stabilize the market, but relief is gradual
• Wrap-up programs can reduce total insurance costs by 8% to 15% on projects over $50M in hard costs
• Lender insurance requirements have tightened significantly — many now require 10-year completed operations coverage

Why Miami Construction Insurance Costs More Than Anywhere Else

Two forces collide in South Florida to create the most expensive construction insurance market in the country: hurricanes and lawsuits. The hurricane piece is straightforward — Miami sits in the most active hurricane corridor in the continental U.S., and carriers price that exposure into every builders risk policy they write. But the litigation piece is what really broke the market.

Florida’s construction defect statute, Chapter 558, created a pre-suit notice and cure process that was supposed to reduce litigation. In practice, it spawned an entire cottage industry of plaintiff firms specializing in construction defect claims. In Miami-Dade, Broward, and Palm Beach counties alone, roughly 28% of closed insurance claims result in lawsuits, compared to about 10% statewide.

• Carriers lost billions in Florida construction defect litigation between 2018 and 2024
• Several major builders risk carriers — including Zurich and certain Lloyd’s syndicates — reduced Florida capacity or exited entirely
• Remaining carriers responded with rate increases of 40% to 100% across consecutive renewal cycles
• Legislative reforms passed in 2023 and 2024 shortened statutes of repose and modified fee-shifting, but the market hasn’t fully absorbed the impact yet
• Our brokers are seeing early signs of rate stabilization on well-structured risks, particularly concrete high-rise projects with strong loss control programs

The Five Coverage Lines Every Miami Developer Needs

Builders Risk Insurance

Builders risk is the foundation of any construction insurance program, covering the physical structure and materials during construction against perils like fire, wind, theft, and vandalism. In Miami, the critical questions are wind/hurricane coverage, the named storm deductible, and whether the policy covers soft costs like architect fees, loan interest, and real estate taxes during extended construction delays.

A $50 million condo project in Brickell might see builders risk premiums of $750,000 to $2 million annually depending on construction type, proximity to coast, and project timeline. Named storm deductibles in South Florida typically run 3% to 5% of the insured value — on that same $50M project, you’re looking at a $1.5M to $2.5M deductible before coverage kicks in after a hurricane.

• Concrete construction qualifies for better rates than wood-frame or mixed construction
• Inland projects (west of I-95) generally price 15% to 25% lower than coastal sites
• Soft cost coverage adds roughly 10% to 15% to the base premium but protects against delay-related financial exposure
• Flood coverage is typically excluded from builders risk and must be purchased separately through NFIP or private flood markets
• Always negotiate for a policy that covers materials in transit and stored off-site — Miami’s supply chain complexity makes this essential

Commercial General Liability

CGL covers third-party bodily injury and property damage claims during construction. Miami’s pedestrian density in areas like Brickell, Downtown, and Miami Beach means jobsite exposures are significantly higher than suburban markets. A crane incident, falling debris, or sidewalk collapse doesn’t just trigger a claim — in Miami, it triggers a multi-million dollar lawsuit.

We typically structure CGL programs for Miami developers at $2M per occurrence/$4M aggregate minimums, with many projects requiring higher limits through excess and umbrella layers. Subcontractor CGL requirements should mirror these limits, with the developer named as additional insured on every sub’s policy.

• Require CG 20 10 and CG 20 37 additional insured endorsements from every subcontractor
• Verify that subcontractor CGL policies include completed operations coverage — this is where defect claims hit
• Consider a blanket additional insured endorsement (CG 20 38) to streamline certificate administration
• Products-completed operations coverage should extend for the full statute of repose period
• Contractual liability coverage is critical — your indemnification clauses are only as strong as the insurance backing them

Workers Compensation

Florida requires workers compensation for all construction employers with one or more employees. There’s no exception for small subcontractors — and the penalties for non-compliance include criminal charges. For developers running an OCIP, workers comp is included in the wrap-up, which eliminates the risk of uninsured subs on your project.

Experience modification rates directly impact premium. A contractor with a 0.80 mod pays 20% less than one at 1.0. We help our clients negotiate experience mod-based subcontractor qualification requirements that keep dangerous operators off the jobsite before they create losses.

• Florida workers comp rates for construction classifications range from $5 to $35 per $100 of payroll depending on trade
• Roofing, steel erection, and demolition carry the highest class codes and premiums
• An OCIP wrap-up enrolls all subs under the project workers comp policy, ensuring no coverage gaps
• Return-to-work programs can reduce claims costs by 30% or more and improve your experience mod over time
• Always verify subcontractor workers comp certificates are current — expired coverage creates direct liability for the hiring contractor under Florida law

Excess and Umbrella Liability

Nuclear verdicts in construction cases have been climbing nationally, and Miami’s litigation environment makes high excess limits non-negotiable. We commonly structure excess towers of $25M to $100M for large development projects, layered across multiple carriers to maximize capacity and competitive pricing.

The key mistake developers make is assuming the umbrella follows form perfectly over the CGL. It doesn’t always. Coverage gaps between primary and excess layers are where claims fall through — and in Miami, where plaintiff attorneys are among the most aggressive in the country, those gaps get exploited.

• Most Miami construction lenders require minimum $10M to $25M in excess liability depending on project scale
• Structure the excess tower with following-form language that mirrors primary CGL terms
• Ensure the umbrella provides drop-down coverage if primary limits are exhausted or a coverage gap exists
• Defense costs should be outside the limits on at least the primary layer
• Annual aggregate restoration provisions protect against multiple claims eroding coverage mid-project

Contractors Pollution Liability

Standard CGL policies exclude pollution-related claims through the absolute pollution exclusion. For Miami projects, particularly those involving waterfront development, brownfield sites, or demolition of pre-1990 structures, a separate contractors pollution liability policy fills a gap that could otherwise result in uncovered environmental claims running into the millions.

We’re seeing increasing lender and municipal requirements for CPL in Miami-Dade, especially for mixed-use projects near Biscayne Bay where stormwater runoff and dewatering operations create environmental exposure.

• CPL covers third-party bodily injury and property damage from pollution events during construction
• Includes cleanup costs for contractor-caused pollution conditions
• Mold coverage is particularly relevant for South Florida’s humidity-driven construction environment
• Premiums are relatively modest — typically $5,000 to $25,000 per project depending on scope
• Many carriers offer multi-year project policies that lock in rates through project completion

When a Wrap-Up Program Makes Sense in Miami

Wrap-up insurance programs — OCIPs controlled by the owner and CCIPs controlled by the general contractor — consolidate all project insurance under one policy. They’re not appropriate for every project, but for Miami developments exceeding $50M in hard costs, the math almost always works. We’ve structured wrap-ups that saved developers 8% to 15% on total insurance spend while eliminating the administrative nightmare of tracking 50+ subcontractor certificates.

The real advantage in Miami isn’t just cost savings. It’s control. When every party on the project is covered under your policy, you control the claims process. You pick the defense attorneys. You set the loss control standards. In a state where construction defect litigation is practically a sport, that control matters enormously.

• OCIPs are typically more cost-effective for projects with 15+ subcontractors and $50M+ in hard costs
• CCIPs make sense when the GC has stronger carrier relationships and loss history than the owner
• Wrap-ups should include completed operations tail coverage extending 3 to 10 years post-completion
• Exclude from the wrap-up: professional liability (design errors) and auto liability (too many variables)
• Budget 2% to 4% of hard costs for a comprehensive wrap-up in the current Miami market

What Miami Construction Lenders Require in 2026

If you’ve closed a construction loan in Miami recently, you’ve noticed that lender insurance requirements have expanded significantly since 2022. Gone are the days when a standard builders risk policy and a CGL certificate satisfied the lender’s risk department. Today’s requirements reflect the losses lenders have absorbed on projects where inadequate insurance left them exposed.

A mid-market construction lender funding a $75M condo project in Miami will typically require all of the following before releasing the first draw. We work directly with lender risk departments to ensure your insurance program checks every box without overpaying for coverage you don’t need.

• Builders risk equal to 100% of completed project value, including soft costs
• Named storm coverage with maximum 5% deductible (some lenders pushing for 3%)
• CGL at $2M/$4M with completed operations extending through the statute of repose
• Workers compensation at statutory limits with $1M employer’s liability
• Excess liability of $10M to $25M minimum, depending on project size and location

How Florida’s Legislative Reforms Affect Your Next Project

The Florida legislature has made meaningful changes to the construction litigation landscape over the past two legislative sessions. SB 360 shortened the statute of repose for construction defect claims and modified attorney fee-shifting provisions that had been driving litigation volume. These changes haven’t produced overnight rate relief — carriers need several years of improved loss experience before they’ll aggressively reduce pricing — but the trajectory is positive.

Our brokers are already using the legislative reforms as leverage in carrier negotiations. When we can demonstrate that a project’s completed operations exposure is reduced under the new statutory framework, we’re getting more competitive pricing on the tail coverage that was previously the most expensive component of the program.

• Statute of repose reduced from 10 years to 7 years for most construction defect claims
• Fee-shifting reforms reduce plaintiff incentives to litigate marginal claims
• Carriers are cautiously increasing Florida capacity as reform impacts become measurable
• Projects breaking ground in 2026 will benefit from the new framework for their entire defect liability period
• Documenting compliance with updated Florida Building Code requirements strengthens your coverage position