The Builders Merchants Federation* report increases in the costs of building materials in quarter two of 2022 which have far reaching consequences when it comes to rebuilding properties after a claim has been processed. For example, timber and joinery has seen a price increase of 37%, and most products increasing in price by 10-15%. This picture is echoed by the Office of National Statistics who report that the cost of materials rose by 20% from July 2020 to July 2021.

These rising construction costs, when coupled with delays in supply chains and a shortage of skilled labour, can lead to underinsurance and so it is imperative to check that you are adequately insured. It’s also worth dispelling a misguided belief -the notion that the market value and the Declared Value are the same thing, and hence to insure for the market value, rather than the Declared Value. This is not true. The rebuild cost should be the declared value as the market value can fluctuate and is not a true representation of the actual cost of the rebuild.

It’s worth noting that the declared value should also reflect the cost of materials, site clearance, labour, architect fees, planning fees and legal costs.

Which brings us neatly back to the beginning…..and why the rise in construction costs can negatively impact your policy and any potential claims. Cause and effect.

To ensure that you navigate these increases correctly, speak to your Alexander Bonhill broker who will be able to discuss your specific case with you.