Episode summary
How Insurance Costs Make NYC Construction so Expensive | Odd Lots
Odd Lots
· · Hosts: Tracy Alloway, Joe Weisenthal · Guests: Elizabeth Crowley, Michael Capasso
Summary
New York City construction is expensive because several cost buckets stack on top of each other: labor, materials, financing, regulation, and especially insurance. The guests argued that union wages are not the main problem on public work, since prevailing wage rules already set the labor floor; instead, they pointed to delays, design changes, and the city’s logistics as major drivers of indirect overhead that keep staff and consultants on the clock.
A central focus was New York’s Scaffold Law, which imposes absolute liability on contractors for height-related injuries. The guests said that rule pushes insurance costs far above other states, with contractors paying around 10% of total construction cost for insurance versus about 2% elsewhere. They argued that high deductibles, limited carrier appetite, and fraud-driven claims have made New York a difficult market, while other states using comparative negligence have not seen worse safety outcomes.
The conversation also covered reform efforts and emerging technology. The guests said faster permitting, better project delivery methods, and more use of AI and cameras on job sites could reduce delays and improve safety. But they also stressed that the city’s geography, underground utilities, and constrained logistics make every project more complicated than it looks on paper.
Key takeaways
- The guests argued that labor is only about 30% to 35% of construction cost, so insurance, delays, and logistics matter just as much in New York.
- They said New York contractors pay roughly 10% of project cost for insurance, versus about 2% in other states, largely because of the Scaffold Law.
- The guests argued that project delays create indirect overhead because project staff and consultants keep getting paid while approvals drag on.
- They said New York’s dense geography, underground utilities, and limited delivery access make even simple projects far more expensive.
- The guests said AI-driven camera systems are already being used on some job sites to detect risky behavior and improve safety.
- They argued that comparative negligence could lower costs without making workers less safe, citing other states’ experience.
Notable quotes
“The company is now 100% at fault. That's absolutely right. And in other states, they do comparative negligence, and it's really driving up the cost of insurance”
“typically labor ranges 30 to 35% of the total construction cost”
“The cost of insurance is only about 2% for the total project cost, where we're spending upwards of 1,012%”
“While those delays are being incurred, contract or are then experiencing indirect overhead costs that are assigned to the project? Well, no productive work”
How the episode opens
If I'm a construction worker working on a Skyrise or something. And I am not wearing my helmet and I fall off a 60 storey building, I would be dead. But let's assume that I get injured.
Probably be dead. I would probably be dead. All right.
A three storey building. Yeah. Okay.
One story. Okay. But I'm not wearing my helmet.
Even though my employer says I should be wearing a helmet, and then I, you know, file a claim. The absolute liability rule basically says that you can't divide blame between the company and the worker. Is that right?
So I'm instead of being 90% at fault for my own injury because I wasn't wearing a helmet and I got a head injury. The company is now 100% at fault. That's absolutely right.
And in other states, they do comparative negligence, and it's really driving up the cost of insurance. So much so that insurers don't even want to write insurance in New York anymore. Hello, and welcome to another episode of the Odd Lots podcast.
I'm Joe Weisenthal. And I'm Tracy Alloway. So Tracy, everyone just like going to affordability these days is the cost of living and all that stuff.
But I think, you know, there's all kinds of things you can do and whatever. But it seems like one fundamental thing, which I think is probably true is whatever we're talking about, whether it's building infrastructure for public transportation, whether it's building offices, whether it's building houses, like there's various costs involved. But one is like just the cost of construction and the cost of construction is very high.
It's hard to imagine affordability improving much on anything. Right? So for I yes, absolutely.
I can't really debate that point. But it does seem like construction is there's like one area where so many different things come into play.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- nyc construction costs
- insurance costs
- construction liability law
- labor availability
- project delays
Companies and tickers mentioned
- Building Trades Employers' Association
- CAC Industries
Watch the episode
Watch “How Insurance Costs Make NYC Construction so Expensive | Odd Lots” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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