The past two years have seen construction material costs soar in the UK. Now the war in Ukraine and soaring inflation are adding even more pressure. The cost of raw materials in the UK is expected to more than treble in 2022, according to the Building Cost Information Service (BCIS) Materials Cost Index.
What’s more, for the first time on record, May 2022 figures show that there are more vacancies in the labour market than there are people looking for work, and nowhere is this more evident than in the construction industry.
Whilst this is an undeniable challenge for the construction sector, this inflationary pincer movement is having a significant impact on the insurance sector too. Namely, policies and policyholders are inadvertently being left behind with regard to rebuild costs.
Why is this a problem for the policyholder? Well, in simple terms, if a policy was originally based on a rebuild cost of £500,000, soaring construction costs may mean that a figure of £1m is now more realistic. If the policyholder were to make a claim of say, £100,000 for repairs, as it’s below the £500,000 policy claim limit, it would be easy to assume that all will be fine. But the insurer would consider the building to have been under insured, allowing the policyholder to pay lower than necessary premiums. As such, in this case, the insurer would only pay out £50,000; half the actual cost of repairs. To many businesses, or indeed private clients, this could have a devastating impact.
Furthermore, BCIS also report that 40% of businesses don’t have enough business interruption cover to get them back on their feet and that in 25% of SME claims reviewed by the FCA, the indemnity period expired before they returned to a normal trading position. This can only be exacerbated by the now inevitable delays in rebuilding or repairing premises, due to labour shortages and raw material delays.
The issue of under insurance was recently highlighted at the British Insurance Brokers’ Association (BIBA) annual conference in Manchester, and BIBA has produced a very useful and easy-read guide on how to avoid it, which can be downloaded here.
We want our clients to have peace of mind that they won’t be exposed to financial loss at a time when they would already be under considerable emotional strain. A very easy way to secure this peace of mind is to ensure adequate buildings cover is provided on a correct rebuild cost.
One way to ensure this is to appoint a Chartered Surveyor to carry out a survey and obtain a full, detailed rebuild valuation. Taking into account the availability, scheduling the visit, carrying out the survey, writing it up and submitting it; it may take 4-6 weeks to complete. Not only is there expense involved here, but there is also the ongoing risk of exposure to being under insured.
At C&C we have a more efficient solution. We are able to offer our clients a rapid rebuild valuation, using easily accessible information, that provides a much more accurate figure on which to base a policy premium. This very low-cost route provides our clients with the peace of mind they expect and deserve from us when recommending the most appropriate insurance solutions for their needs. Our consultative approach to our clients’ welfare, whether business or personal, is at the heart of our values, regardless of which of our network of offices across Chester, Dumfries Leeds, London, The Midlands, Newport or Stockport, our clients work with.
Please contact us at info@cc-insure.com or call on 0161 406 4800, if you’d like to discuss how to secure your own policy peace of mind during these inflationary times.
Please note this service is not regulated by the Financial Conduct Authority. In addition, this service does not benefit from the protection offered by The Financial Ombudsman Service or the Financial Services Compensation Scheme.
