In 2026, contractors continue to face an all-too-familiar set of challenges: rising costs, labor shortages, evolving technology and an increasingly complex risk environment. In many cases, these challenges have intensified as the year has progressed.
Like executives across industries, construction leaders continue to feel pressure from rising costs and workforce challenges, according to Sentry's 2026 C-Suite Stress Index. The research also indicates that some of the risks most likely to cause significant disruption — including litigation and severe weather — don't always receive the attention they warrant.
Preventing losses and reducing the potential for costly coverage gaps requires more than a once-a-year review. As contractors begin planning for 2027, now is a good time to reassess whether your coverage and risk management strategies still reflect today's operating environment.
Rising Costs Still Warrant Close Attention
Contractor costs continue to rise, from material prices and equipment replacement costs to overall project valuations. In many cases, those costs have exceeded initial estimates, which can quickly put projects over budget.
According to Associated Builders and Contractors, nonresidential construction input prices were up 2.9% year over year as of January, with tariff-related increases in copper, steel and industrial equipment among the key drivers.
As costs continue to change, contractors should consider:
- Confirming builders' risk and contractor equipment coverage limits still reflect current project values, especially if material or equipment costs have shifted since your last renewal.
- Reassessing property coverage to account for inflationary pressures, supply chain disruptions and tariff-related price increases.
- Evaluating ongoing projects to determine whether changing costs have altered overall risk exposure.
- Considering whether delayed equipment purchases, deferred maintenance, or extended equipment life cycles have introduced potential coverage gaps.
Reliance on Less Experienced Workers Elevates Risk
The construction industry's workforce challenges remain among its most pressing concerns. Finding qualified workers continues to be difficult, prompting many businesses to rely more heavily on newer employees, temporary workers or crews taking on expanded responsibilities.
According to the C-Suite Stress Index, two-thirds of executives have either experienced increased claims related to unskilled or under-skilled workers or are concerned they will soon. The research also found that 84% of leaders say employees are performing tasks outside their typical responsibilities, above their experience level or without sufficient training. Additionally, 83% plan to increase investments in worker safety this year.
These findings suggest business leaders recognize the need to strengthen safety efforts as workforce dynamics continue to evolve. That focus shouldn't stop at the jobsite. As newer employees take on responsibilities that may include operating company vehicles, towing equipment or transporting crews between locations, organizations should also reinforce safe driving expectations and operational vehicle policies.
To strengthen safety as workforce challenges persist, contractors can:
- Enhance onboarding programs for new and less experienced workers.
- Reinforce expectations through regular toolbox talks and ongoing safety training.
- Pair newer employees with experienced mentors to build skills and confidence on the jobsite.
- Encourage employees to report hazards, unfamiliar tasks or situations they don't feel adequately trained to handle.
- Update workers' compensation payroll estimates to reflect current staffing roles and levels, overtime and subcontractor usage.
- Extend onboarding and refresher training to employees who operate company vehicles, reinforcing expectations around distracted driving, seat belt use, backing procedures and vehicle inspections.
Why Litigation Risk Should Be Higher on Your Radar
Litigation remains one of the more significant — and often underestimated — risks contractors face today.
The C-Suite Stress Index found that 93% of executives reported their companies had been affected by lawsuits within the previous five years. Yet only 17% identified lawsuits among their top concerns for the year ahead. Meanwhile, nearly seven in 10 leaders said a single multimillion-dollar verdict could put their businesses at risk.
As liability exposures continue to evolve, contractors should consider:
- Reviewing umbrella and excess liability coverage to determine whether current limits remain appropriate.
- Evaluating contracts and indemnification provisions to better understand potential liability.
- Consistently documenting safety programs, training efforts and incident response procedures.
- Reviewing subcontractor management and qualification practices to help reduce third-party risks.
- Strengthen fleet safety programs through regular driver training, coaching, documented vehicle inspection procedures and clear expectations for safe vehicle operation.
- Considering technologies such as dash cameras and telematics to support driver performance, identify unsafe behaviors and provide documentation following an accident.
Weather Resilience is Becoming a Business Imperative
Businesses are already feeling the impact of severe weather, and the likelihood of disruption is expected to increase as extreme weather events become more frequent across the United States.
The C-Suite Stress Index found that 92% of executives had experienced weather-related disruptions during the previous five years, and half believed a future catastrophe could threaten their company's survival. Despite that, only 32% identified natural catastrophes among their most significant risks.
Beyond property damage, severe weather can delay projects, disrupt supply deliveries, increase roadway hazards for employees traveling between jobsites and force crews to suspend operations. To help reduce weather-related risk, construction leaders should:
- Confirm that property and business interruption coverage reflects weather-related exposures.
- Ensure emergency response plans and communication protocols account for weather-related scenarios.
- Strengthen relationships with alternative suppliers to reduce dependence on regional partners.
- Partner with your insurer to identify potential coverage gaps before a weather event.
AI and Technology Change the Risk Picture
Construction firms' growing reliance on technology is making them increasingly attractive targets for cybercriminals. Cyberattacks targeting construction and engineering organizations rose 23% year over year as of May 2026, according to Check Point Research.
Cyber incidents, payment fraud, system outages, and compromised project data can disrupt operations, while AI-assisted decision-making introduces new questions around oversight and accountability.
To help manage technology-related risks, contractors can:
- Take inventory of the technology platforms, connected devices and AI-enabled tools used across their operations.
- Prioritize cybersecurity practices, including employee training, password management and access controls.
- Establish clear policies governing how AI tools can be used for estimating, planning, documentation and other business functions.
- Work with insurance partners to identify potential gaps related to cyber liability, professional liability or other technology-driven exposures.
Key Coverages to Revisit Before 2027
As renewal discussions approach, construction business owners should revisit several key coverages to help ensure limits and protections continue to align with how costs, workforce needs and risk exposures have evolved throughout the year.
Consider reviewing:
- Workers' compensation to account for workforce changes, overtime and evolving safety risks.
- Builders' risk, contractor equipment, and property coverage to address changing project values and replacement costs.
- Property and business interruption coverage to reflect weather-related exposures and operational disruptions.
- Cyber and professional liability coverage as technology, connected systems and AI become more integrated into operations.
- Umbrella and excess liability coverage in light of continued litigation pressures and rising verdicts.
- Commercial auto coverage to confirm vehicle schedules, driver exposures, hired and non-owned auto needs and fleet operations continue to reflect how vehicles are used today.
Stay Nimble for the Future
The construction industry has always adapted to changing conditions. The remainder of 2026 will likely bring additional challenges, but it also presents an opportunity to reassess priorities before entering a new year.
The goal isn't to anticipate every disruption that might emerge in 2027. It's to make sure safety programs, operational practices and insurance strategies continue to evolve alongside the realities contractors face every day.
Taking time now to review your organization's risk management approach can help ensure your business is better positioned for whatever comes next.
