Liability insurance gives builders coverage for damages resulting from third-party claims such as bodily injury and property damage. In recent years, insurance coverage for builders has become dramatically less available, and builders are seeing enormous increases in premiums. In addition, the insurance industry has narrowed the scope of coverage for builders. In short, building professionals are confronting a nationwide liability insurance crisis.

Earlier this year, the NAHB Research Center conducted a roundtable with representatives from the home building and insurance industries to address insurance issues facing builders and to identify corrective measures for them, as well as specify steps for both industries to take advantage of the National Housing Quality (NHQ) quality assurance training and certification programs.

The roundtable report concludes, "There may be a powerful relationship between insurance availability and/or rates and quality assurance programs." It seems the insurance industry would view implementation of a risk management program, to include quality assurance programs, by builders and contractors as a major step toward solving many insurance problems in the home building industry.

Sean Cavanaugh, general manager of Gypsum Construction, an NHQ-certified trade contractor in Las Vegas, says, "When we had our general liability insurance renewed, our carrier said that without the quality system that we have developed in place, they would not have given us a quote. And, instead of our traditional 300 percent to 400 percent increase, our premium remained stable."

For more information on the NHQ Certified Trade Contractor and Certified Builder programs, contact Dean Potter at the NAHB Research Center, at