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Construction industry supply and demand trends; the impact on buildings reinstatement costs

1/7/2021

Risk Control

We wrote in an earlier article about the dangers of under insurance and the risk of ‘Average’ being applied by insurers in the event of a buildings insurance claim where there is a discrepancy between the sum insured, and the actual cost of reinstating a building.

This is of particular relevance at the moment where price hikes in buildings materials are being experienced globally. This is down to a number of influences including:

  • The rise in residential D.I.Y projects during lockdown
  • The easing of restrictions meaning larger construction projects have surged
  • Weather issues impacting timber supplies
  • Supply issues linked with Brexit

Such occurrences have restricted supplies and fuelled demand for materials such as timber, steel, bricks, paint and cement. This supply and demand predicament is expected to sustain elevated prices throughout the year and beyond.

What’s more, a skilled labour shortage in the construction industry along with the demand for building work has made construction more expensive. An increase in shipping costs is adding further to the overall cost of building projects.

Standard index linking applied to building insurance policies in line with inflation indexes each month, is also not keeping up with the cost of building increases.

Needless to say, with so many influences impacting the market, there is no better time to mitigate any risk and have your building sum insured re-evaluated by a chartered surveyor. This will ensure the sum calculated reflects the worst case scenario in your insurance policy.

If you would like to arrange a buildings reinstatement survey, Quality Care Group can assist. Just click here to enquire further.

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