Over the past several years, the cost to repair and rebuild homes and commercial buildings has changed significantly. While the extreme price spikes seen during the pandemic have moderated, construction costs remain well above pre-2020 levels and continue to increase.
According to the National Association of Home Builders (NAHB), prices for residential construction materials have continued to climb, with overall building material costs increasing more than 3% year over year and services such as labor rising even faster. Certain products—including metal building materials, electrical components, and other specialty items—have experienced much larger increases due to ongoing supply challenges and tariffs.
Labor also remains a major factor. The construction industry continues to face a shortage of skilled workers, with nearly 300,000 open construction jobs nationwide and an estimated need for 740,000 new workers annually to meet demand. These shortages can increase labor costs and extend rebuilding timelines following a loss.
The result is simple: it costs more to rebuild today than it did just a few years ago.
If your home, business, or other property hasn’t had its replacement cost reviewed recently, your current insurance limits may no longer reflect today’s rebuilding costs. Following a major loss, this could leave you responsible for unexpected out-of-pocket expenses if your coverage isn’t sufficient.
In addition to higher repair costs, longer construction timelines can also impact businesses recovering from a covered loss. Delays caused by labor shortages, material availability, or supply chain disruptions may increase the time needed to resume operations, making it important to review not only your property coverage but also your business income and extra expense protection.
The good news is that reviewing your coverage is easy.
Your insurance advisor can help evaluate the replacement cost of your buildings, contents, equipment, and business income exposure to ensure your coverage reflects today’s construction environment. A periodic insurance review can help provide peace of mind that you’re better protected if the unexpected happens.
Martin Caton
Vice President, Commercial Lines
License #2296016