In the field of construction, every decision can have a significant impact on the project's overall cost, timeline, and long-term durability. One of the critical choices facing developers, manufacturers, and architects is the selection of framing materials. Traditionally, wood has been the go-to material for many projects. However, an increasing number of industry professionals are turning to cold-formed steel (CFS) framing, not just for its strength and durability but also for the substantial insurance savings it offers, particularly with builder’s risk insurance.
Builder’s risk insurance, also known as course of construction insurance, is a specialized type of property insurance that covers buildings under construction. This insurance protects against various risks, including fire, wind, theft, and vandalism. The cost of this insurance is influenced by several factors, including the type of materials used in the construction process.
Steel framing is renowned for its exceptional durability and resistance to a wide range of environmental challenges. Unlike wood, steel is non-combustible, impervious to termites, and highly resistant to mold and mildew. These properties make CFS an ideal choice for buildings in areas prone to floods, wildfires, hurricanes, and other natural disasters.
One of the most significant advantages of steel framing over wood is its fire resistance. Steel does not ignite or contribute to the spread of fire, a critical factor in minimizing damage during a fire incident. This inherent fire resistance translates to lower risk and, consequently, lower premiums for builder's risk insurance. Insurers in some markets recognize the reduced likelihood of catastrophic fire damage in buildings framed with steel, offering more favorable rates compared to wood-framed structures.
Cold-formed steel provides superior strength and stability, ensuring that the structure can withstand various stresses without warping, twisting, or shrinking. This structural integrity not only enhances the building's longevity but also reduces the potential for insurance claims related to structural failure or damage over time.
The non-combustible nature of steel significantly lowers the risk of fire-related incidents, which is a primary concern for insurance providers. By opting for steel framing, developers and builders can benefit from substantially lower builder's risk insurance premiums. These savings can be considerable, especially for large-scale projects, where insurance costs constitute a significant portion of the budget. Premiums can be lowered by as much as 25 to 75 % for the use of steel-framed products.
The durability of cold formed steel framing leads to fewer claims related to damage from pests, rot, and structural failures. This reduction in claims not only lowers immediate insurance costs but also contributes to lower long-term maintenance expenses. Over time, the cumulative savings from reduced insurance premiums and maintenance costs can make a substantial difference in the overall financial health of a construction project.
Using steel framing can also help meet stringent building codes and safety regulations, which can further reduce insurance costs. Buildings that adhere to higher safety standards are perceived as lower risk by insurers, resulting in additional savings.
One illustration of how cold-formed steel reduced insurance costs is a 4-story, 400-unit hotel constructed over 24 months in Ohio. Using CFS, the builder's risk insurance was $360,000. In contrast, if the hotel had been built with wood, the same coverage would have cost $1.6 million. This resulted in insurance savings of over $1.3 million with CFS.
For developers, manufacturers, and architects, the choice between wood and cold-formed steel framing is more than just a matter of material - it's a strategic decision that can significantly impact the project's financial viability. The insurance savings associated with steel framing, particularly in terms of builder's risk insurance, make it a compelling option for modern construction. By opting for steel framing, industry professionals can not only enhance the durability and safety of their buildings but also achieve significant cost savings, making it a smart and forward-thinking investment.