Sheffield broker’s advice to avoid underinsurance following building supply chain slow down
9th August 2021
During the first six months of 2021 there has been a significant increase in the price of materials needed for the building and construction industries which can cause underinsurance.
Sheffield broker IFM Insurance is urging local firms involved in the building and construction industry to ensure their insurance policy is fit for purpose to avoid the threat of underinsurance.
During the first six months of 2021 there has been a significant increase in the price of materials needed for the building and construction industries. The impact of Brexit and the pandemic over the past 18 months has resulted in a sharp increase in building costs caused by supply chain limitations and increased demand in building materials. What’s more the coronavirus-induced shutdowns of factories and people working from home have only added to the problem.
The increased cost of building materials has a knock-on effect on those firms involved in the building and constriction industries as they may be in danger of being underinsured. With labour and building materials set to increase into 2022, it’s important for these firms to ensure their sums insured are set at the correct levels.
The Builders Merchants Federation (BMF) reports that timber prices had surged by 20 by the end of January, while some roofing parts are likely to be unavailable until August. There have been reports of shortages of insulation, plaster, concrete products and even power tools in recent months.
IFM top tips
• Meet with your broker well before your next renewal to uncover whether your business insurance is providing the right protection
• Ensure replacement cost estimates for buildings, contents, equipment and business interruption are set at the appropriate coverage levels
• Conduct regular, accurate valuations of buildings and contents using a professional valuer.
• Consider how any inflationary increase could affect the sum insured. Although most policies are index-linked, an increase in the cost of building materials could directly impact on rebuilding costs.
Jamie Harvey, a director at IFM Insurance said: “The pandemic and Brexit have clearly had an impact on supply chains serving the building and construction industries. This has resulted in a shortage of building materials and skilled staff, which in turn increases costs. It is vital for firms involved in the building and construction space to ensure their assets are valued correctly so that in the event of a claim their policy will respond”.