Are Your Rebuild Costs Accurate?
February 3, 2022
Whether you are a Business Owner, Property Manager or Homeowner, start February off with an easy-to-accomplish resolution and check that your property is insured for the correct rebuild cost.
The past two years have been more than a little chaotic and disruptive. It’s likely there’s more than one worry on your mind – so why should you be thinking about something that seems so trivial as the rebuild cost of your property?
If you’re over-insured, you’re probably paying too much for your insurance. If you’re under-insured, you face a reduced payout in the event of a claim – potentially by hundreds of thousands of pounds.
There are many factors contributing to the concern of inaccurate rebuild costs across the nation:
- Significant increased costs of the materials – the cost of materials for ‘all work’ increased by 23.6% between September 2020 and 2021
- Wage increases, partly due to the short supply of labour in the construction sector following Brexit – between 2020 and 2021, 1.5m workers were lost to the construction sector 1
- Cost pressures have also been applied by Chinese demand for steel on the world market and extended lead times for all materials – the cost of steel rose by 72.6% in this period, timber climbed by 73.3% during the past 12 months and even the cost of paint has risen by nearly a third 2
- Increased costs associated with the specialists you'd need to employ for a rebuild as professionals, including surveyors and architects, have to respond to dramatic rises in the cost of professional indemnity insurance in their sector by either passing on the costs or facing financial perils as a practice 3
These price rises are expected to affect construction well into 2022 as the Construction Products Association said in August they anticipated issues to continue for six to nine months.
A survey has found that most commercial properties are not insured for the right amount in the UK, with more than 84% either underinsured or insured for too much. 4 Many business owners have insured properties on the basis of ‘market value’, rather than rebuild cost.
Even if the rebuild cost was calculated correctly, this could have been some years ago when the insurance cover was placed. The price rises in the costs of building materials that we are seeing now make it important to check how close your buildings sum insured is to the actual amount you would be likely to have to pay, if you needed to rebuild your property.
If this seems daunting, we are here to assist you. If you contact us, we will be happy to guide you through how your sum insured should work, for both your property’s fabric and rebuild, and the contents you own. We also offer a low-cost rebuild cost assessment where you will receive a comprehensive report, guiding you on how much you shoud insure your buildings for.
Doing this now, and getting your figures in order, could prevent heartache at a later date.
Sources:
1 Underinsurance made worse by rising construction costs
2 Construction materials shortage
3 Insurance Crisis: A ticking timebomb for architects
4 Buildings Insurance: Why Check?
