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Risk Management

The Rising Cost of Construction: What it Means to You

By September 7, 2021No Comments

If you’ve renovated your home or business in the last 18 months, you have been privy to the conversation that goes something like, “it’ll cost WHAT for lumber?!?!” “I have to wait HOW LONG for my windows?!?”

Because of reduced supply with increased demand, the cost of building materials has risen dramatically. Basic economics, right? The increased cost of building materials means that it will likely cost more to rebuild or repair your home or business after a loss.

Don’t let this speedy economic change leave you hanging during a loss. Your insurance premiums are calculated partly on the value of your building and its contents. If a loss occurs, you don’t want to find out after the fact that your property is under-valued.

Here’s what we recommend:

  1. Review your insurance policy, and specifically look at the property values.
  2. The market/appraised value of your property is not the same as the replacement cost.
  3. Talk to a contractor and ask him or her what the cost of construction per square foot might be for a home or business like yours. It will likely be $150-300/sq. ft. Multiply that number by the square footage. If your number is not close to what’s on your policy, we might have some updating to do.
  4. During your insurance renewal, help the Strate Team by really paying attention to property values. Take the time to walk through your home or business and make sure the values we have for the property (including business personal property and contents) is accurate. We can assist you, but you know your home and business operations better than we do.
  5. Don’t wait until your renewal. There’s no time like the present to update property values because a loss can occur at any time. Call or email your Strate Customer Success Manager, and we will be happy to update the values for you.

If you have any questions or concerns, please reach out to your Customer Success Manager who can talk you through this process.