When Fire Insurance Joins the Framing Meeting: Prefab Steel vs. Wood

Author: Ericson Tua'one, Chief Executive

The lowest framing bid does not tell you what the building will cost. It tells you what is included in that framing proposal. Insurance, fire protection, delivery, and the cost of finishing the job still need to be accounted for.

That does not make wood the wrong choice or steel the right one. It means we have more work to do before choosing.

I want those numbers on the table before the framing package is awarded—not after we have committed to a system.

Eight minutes in Charlotte At 8:55 a.m. on May 18, 2023, workers discovered a fire at the Modera SouthPark apartment project in Charlotte, North Carolina. The development was planned for 239 apartments, with five stories of wood construction above a two-story concrete podium. The fire began in a trailer containing spray-foam equipment beneath the podium, beside an elevator shaft. NFPA

Workers tried to put it out. The 911 call came eight minutes later, at 9:03 a.m. Evacuation began at approximately 9:05 a.m. The shaft helped carry fire upward through the unfinished building. NFPA

Two workers died. Fifteen workers were rescued. More than 200 firefighters responded. The building was destroyed, with losses reported in the tens of millions of dollars. NFPA

NFPA’s account identified unattended equipment, inadequate extinguishing capability for chemicals on site, delayed notification and evacuation, no standpipe, and no construction fire-safety plan. NFPA

This was not simply a combustible-framing problem. Several failures gave the fire an opportunity to grow while workers were still inside.

The investigation does not tell us whether steel would have prevented the tragedy. We should not claim that it does.

What the account makes clear is that material selection cannot substitute for construction fire protection. Someone has to be responsible for the equipment, the temporary safeguards, the emergency procedures, and making sure workers know what to do.

The exposure does not end at occupancy Charlotte was an unfinished building. Avalon at Edgewater, New Jersey, shows why the discussion also matters after people move in.

On January 21, 2015, maintenance work accidentally started a fire inside a wall at the apartment complex. Authorities reported that the sprinklers were working and that the building complied with applicable construction and fire codes. Fire officials nevertheless described rapid spread through lightweight wood construction and concealed spaces. The News & Observer · NJ.com

Approximately 500 residents were permanently displaced, while hundreds of neighbors were temporarily displaced. There were no fatalities, but families lost their homes. The News & Observer

The proposed response was not simply to abandon wood. Rebuilding plans included additional sprinklers and masonry separation walls while retaining predominantly wood construction. Those plans still drew scrutiny from local officials. CBS News

For an owner, the question goes beyond whether a building meets code. It is also how the design addresses fire spread and the consequences of a major loss.

Changing the frame does not answer every part of that question. Concealed spaces, separation, suppression, and emergency response still need attention.

What the framing estimate leaves out A cost study published through the Steel Framing Industry Association compared wood and cold-formed steel designs for a roughly 49,900-square-foot, five-story mixed-use building. Both alternatives included a concrete podium. R.A. Smith cost study

Using end-of-2017 Chicago pricing, the framing systems were estimated at $21.90 per square foot for wood and $26.50 for cold-formed steel. Steel was approximately 21% higher on that framing-system comparison. R.A. Smith cost study

The whole-building construction estimates were much closer:

Wood: $6,257,000.

Cold-formed steel: $6,420,000.

Difference: $163,000, or 2.61%.

R.A. Smith cost study

These were historical construction estimates, not current bids or complete development budgets. Land costs were excluded. The framing comparison also included defined decking, sheathing, and partition-framing components—not just lumber versus steel studs. R.A. Smith cost study

The framing package showed a substantial percentage difference. Across the building’s construction cost, the difference was much smaller.

The researchers then examined construction insurance.

New Jersey: a $107,855 adjustment The researchers theoretically relocated the design to Morristown, New Jersey, adjusted construction costs for location and to mid-2019 pricing, and evaluated differences in builder’s-risk and general-liability insurance. This was a modeled comparison, not a second completed building. R.A. Smith cost study

Before the differential insurance adjustment, the estimates were:

Wood: $6,401,779.

Cold-formed steel: $6,568,551.

Steel premium: $166,772, or 2.61%.

After the adjustment:

Wood: $6,401,779.

Cold-formed steel: $6,460,696.

Remaining steel premium: $58,917, or 0.92%.

R.A. Smith cost study

The modeled insurance differential reduced steel’s additional cost by $107,855. Steel remained more expensive, but the gap narrowed substantially. R.A. Smith cost study

The report applies that differential as a reduction to the steel comparison. These totals are not a complete itemization of each alternative’s insurance premiums. The study also used historical pricing and came through a steel-industry initiative. It does not establish a universal discount or annual operating-property insurance savings. R.A. Smith cost study

I would not promise an owner the same result. I would ask the broker to price both alternatives before we make the decision.

Read the coverage, not just the premium A lower premium needs a second look. What coverage comes with it, and what exposure stays with the owner?

Builder’s-risk insurance addresses covered physical loss or damage during construction. General liability serves a different purpose, including third-party bodily injury and property-damage exposures. Neither is a promise to reimburse every financial consequence of a fire. Zurich: Builder’s Risk · Zurich: Construction

Replacing damaged work is one problem. Paying for a delayed opening is another.

Zurich identifies delay-in-completion coverage, including certain lost earnings, rental income, and soft costs, as available within its builder’s-risk offering. Travelers also identifies soft-cost coverage with defined limits. Those protections need to be verified in the actual policy. Zurich · Travelers

If a covered fire delays opening, I want to know which expenses are addressed, what conditions apply, and where the limits stop.

Until we understand those terms, we have not finished comparing the insurance.

Insurers look at more than the material Zurich’s approach to mass timber offers a useful example.

In 2021, it launched builder’s-risk products offering up to $50 million in capacity for qualifying mass-timber risks. One addressed individual buildings; another addressed multiple projects through a master program. That figure described available insurance capacity, not a premium discount. Zurich: Mass timber

Mass timber is not conventional light wood framing. Zurich distinguishes its engineered fire behavior, including the protective char layer that can develop on sufficiently large timber members. An insurer needs to understand the actual construction system rather than rely on the word “wood.” Zurich: Mass timber

Zurich also describes examining manufacturers, component origins, and transportation protection. A damaged prefabricated component may need to be reproduced, affecting the construction schedule. Zurich: Mass timber

That brings the discussion back to prefab steel. The insurance review needs to account for what happens before the components reach the building.

Follow the panels Picture a completed framing panel at the manufacturer’s yard. It is loaded onto a truck, delivered to the project, and stored until the crew is ready.

Whose insurance applies at each step?

Zurich identifies transit and off-site storage protection as available depending on policy structure. Travelers also describes protection for construction materials on site or in transit. The coverage still has to match the project’s locations, values, and delivery plan. Zurich · Travelers

Have the broker and contracting parties document those handoffs. Do not assume the manufacturer’s insurance, transportation coverage, and project policy fit together without gaps.

That review should happen before a shipment leaves the yard, not after someone discovers damaged panels.

What steel and prefabrication actually contribute Steel framing is noncombustible, but it is not fireproof. Elevated temperatures can reduce its strength, and performance depends on loading, exposure, member characteristics, and protection. A steel stud alone does not create a one-hour or two-hour wall; fire resistance depends on the assembly or element and its accepted design basis. AISC: Fire Facts

I would rather see the assembly requirements than a brochure calling the building “fireproof.”

The same standard applies to schedule claims.

BuildSteel identifies potential benefits from panelization, including reduced field labor and waste and improved production consistency. Those are industry-stated benefits, not guaranteed project results. The cost study discussed here does not separately establish a prefabrication saving. BuildSteel · R.A. Smith cost study

Before putting a schedule saving into the financial model, answer three questions:

Which activity becomes shorter?

Does that move the completion date?

Which costs stop—or which revenues begin—because of that change?

If faster framing does not move the opening date, do not count it as earlier revenue.

Bring the broker in before the award I want the builder, engineer, supplier, and broker looking at the same drawings and schedule before the owner commits.

Compare two buildable alternatives using written insurance indications. Keep the project values, coverage limits, deductibles, policy scope, and assumed construction duration consistent. Evaluate any supported schedule difference separately.

The questions are practical:

What does each installed system include, and what has been left out?

What premiums, deductibles, exclusions, and policy conditions apply?

Who covers materials at the factory, in transit, and while awaiting installation?

Which delay-related expenses are covered?

Who is responsible for construction fire protection and emergency procedures?

What happens to coverage if the project runs late?

NFPA 241 provides a framework for construction fire safeguards. The Charlotte account underscores why the written program, assigned responsibilities, training, and emergency preparation need to be in place—not left for someone else to handle. NFPA

Review operating-property insurance separately. A construction-phase insurance difference is not evidence that the same saving will continue after occupancy.

This review should happen while the team can still change the design, negotiate coverage, or revise the delivery plan.

Make the decision before it becomes a commitment The New Jersey study did not make steel the cheaper option. It showed that the modeled insurance adjustment reduced steel’s additional cost from $166,772 to $58,917. That is worth investigating on another project, not promising on one. R.A. Smith cost study

I would not choose wood from a framing price alone. I would not choose steel from an advertised insurance discount either.

Give the owner comparable installed bids, written coverage terms, a coordinated fire-protection plan, and a schedule the team can support. Then explain what each alternative costs and what responsibility remains with the owner.

If wood is the better-supported choice, use it. If prefabricated steel justifies the additional expense, show how.

The goal is a building we can finish, insure, and put to work within a budget that accounts for what it takes to deliver it. That is the comparison I want settled before anyone signs the framing contract.