Since 2020, the world has seen supply chain problems, catastrophic weather events, wars, political upheaval, and viruses.
All of these events have put upward pressure on costs for everything, including construction costs. Costs of labour and materials have significantly increased, due to increased demand, in amounts that are well outpacing consumer inflation rates. This creates new risk for businesses who may need to rebuild after a property loss during this period of increased construction costs.
Due to the steep construction inflation increases, businesses should consider reviewing their property coverage (i.e. building, equipment, stock, etc.) limits on their insurance policies now, rather than waiting until their next renewal time, to ensure that the amounts insured will still be adequate in the face of a loss.
It is important to recognize that replacement cost from an insurance perspective can often be more than the market value of an item. Construction costs can be higher due to supply chain issues, plus, in the case of an insurance claim, the additional expense associated with the urgency of getting back up and running in a timely fashion. A contractor repairing a building under an insurance claim doesn’t necessarily have the time to plan or purchase materials to suit their schedule, causing further pricing pressure.
Businesses should also consider critical components of the products they produce and/or manufacture, or tools and supplies for the services delivered, to determine if they have jumped in value. Again, given how rapid prices are increasing, insurance limits may need to be reviewed and adjusted mid-term, rather than waiting until the next renewal time.
What’s the next step? Contact your insurance broker to review your limits, and discuss how you can be sure you are properly protected before you have a claim.
Not currently insured with Staebler? Reach out to our Commercial Solutions team to get a quote, discuss your coverage options, and be sure that your business is properly insured.
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Be Wise. Staebler Insurance is a general insurance broker specializing in auto insurance, home insurance, small business, and commercial insurance. Staebler brokers proudly serve Kitchener, Waterloo, Cambridge, Guelph, Stratford, Listowel, Fergus, Elora, Wellington County, Perth County, Waterloo Region and southern Ontario. Get started with a free quote today.
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