As you may have seen or heard recently, the cost of building materials has risen dramatically. Reduced supply coupled with increased demand have caused the change. In 2020, the average cost of U.S. commercial building materials – such as lumber, masonry, steel, roofing, insulation plumbing and drywall – increased by 9.6%. All construction material aggregates have seen cost increases from this time last year. Lumber, in particular, has seen a significant increase in year-over-year cost at nearly 34%. Additionally, labor costs continue to grow, with many key construction occupations experiencing earnings growth over 4%. Roofer costs have increased the most, up 5.6% from last December.
The trend has increased in 2021. Because the price of building materials has increased dramatically, the cost to repair or rebuild your home, business, or other structures following a loss may be significantly higher than the amount of coverage you currently have in place. If a major loss does occur, there is the possibility of an unanticipated out-of-pocket expense because of this unusual increase in repair costs. With shortages in workers and more costly materials, many businesses are experiencing delays in post-loss recovery, putting their businesses at risk of exceeding policy limitations.
Forecasters indicate this trend with continue through 2023. Your insurance advisor can help reevaluate replacement costs estimates for your buildings, contents, equipment and business interruption to ensure the appropriate coverage levels are in place.
Martin Caton
731-288-1600