Your partner in protecting your business
In late March 2021, the Associated General Contractors of America (the AGC) issued a Construction Inflation Alert informing project owners, government officials, and the public about extreme cost increases and supply-chain disruptions that were affecting construction. Since that time, price increases have strengthened and lead times have lengthened.
Jeff Lipshires, president of J2 Construction in Middletown RI said "We have been experiencing unprecedented volatility and price escalation in all categories of building materials. In a given month, for example, we have seen sharp rises of up to 25 to 50 percent or more in various lumber products. This far exceeds the normal escalation of 2 to 3 percent we see in any given year"
Inflated costs of construction not only effect the cost to build, but the cost to re-build, in the case of, say, a fire to your home or commercial building. Why does that matter to you as a property owner?
Your home insurance or commercial property insurance covers a "bundle" of items, not the least of which is the cost to replace your structure in the event of a covered loss. This coverage is in place to restore the insured's property to the condition it was before the loss and so a cost estimation is done when the policy is put in force. Most policies have an "inflation guard" which increases somewhere around 4% for personal lines insurance and between 2% and 8% per year for commercial, to guard against the normal uptick in the cost of goods and services to rebuild.
However one has to ask, in this period of higher than normal inflation, if you were to suffer a loss, would you have enough to rebuild?