Construction Costs Are Rising By The Day: Are You Under-Insured?
Our news channels have been dominated by the pandemic and health emergencies around the nation for the past two years. This unheard-of occurrence had a tremendous impact on property construction costs as well as other socioeconomic sectors. The fast increase in construction costs and the demand for homes in major urban centres as well as out toward suburban and rural regions has shocked Canadians from coast to coast and continues to do so. The housing market experienced a fall in sales, listings, and pricing during the early lockdowns and the acute outbreak as individuals stayed at home. Nobody could have predicted the ensuing fury at that time.
The cost of building and infrastructure construction has soared to unprecedented heights. Why? 1) A global pandemic. 2) Supply shortages and project delays. 3) Record breaking price surges in common building materials. 4) A spike in home renovations due to a shift to working-from-home. 5) Increased demand on rebuilding/repairing properties that were damaged by severe weather events.
All of these factors are contributing to massive rise in construction costs.
For instance, the price of lumber has climbed by almost 400% since 2019. And depending on where you live in Canada, a sheet of Oriented Strand Board that was around $15 a few years ago, now costs you up to $56.
In the span of 1 year, construction costs have increased by 6.4% year over year in all provinces across the country.
At the start of COVID-19, the steel industry closed or reduced capacity significantly – from 87% to less than 50% – causing prices to double.
How does this affect you?
Even if you’re not currently paying a lot more for home renovations or other property construction projects, these recent trends affect your insurance.
You’re open to the risk of severe loss if something happens and your Home or Commercial Property is not insured to the current value of replacement construction costs.
What should you do? 1) Take a look at your property valuations Use a skilled replacement cost appraiser or contractor to evaluate your property's assets. 2) Speak with your Insurance Broker Your broker will assist you find coverage gaps, thoroughly explain coverage restrictions, and walk you through the appraisal process. 3) Update your policy To make sure that your residential or commercial properties are insured to value, your broker can assist you in updating your policy.
The basic vanilla products that term plans were up until a few years ago, have updated to the well customized insurance plans. Insurance firms have developed innovations for a range of clients and circumstances like Covid 19.
We take immense pleasure in helping you Insure your Home Insurance.
Feel Free to Contact us for any Insurance related queries.