A reminder that building costs and construction times have increased

Anyone that has been able to get inside a Bunnings or other hardware/timber suppliers will have seen the empty shelves in the timber section, particularly in framing timbers.

A shortage of many building materials is matched by an increase in demand and this has led to a sizeable increase in the cost of construction.

At the same time many insureds are looking to reduce their premiums and do not want to hear about the need to increase their building sums insured/declared values/limits of liability.

Nonetheless it is imperative that brokers have this difficult conversation with their clients and explain the need to be fully insured, the penalty under commercial property insurance when they are under insured, even with a moderate sized loss and what they have at risk if they do not take your advice.

The free LMI Under-Insurance Calculator App is a easy way to demonstrate the exposure when an insured is not fully insured. Whatever method you use, it is equally important that you document your conversation as many insured’s get a case of amnesia after a loss has occurred and rather than accept they made a poor financial decision they blame the broker.

The App that I mention above allows the user to send a copy of the calculation to the insured with a automatic cc to the broker.

Yet another thing to keep in mind is that construction times are blowing out and longer Indemnity Periods need to be considered.

Long term readers will know that I have posted on this subject many times before but we are at a time where we in claims are again seeing far too many clients, clients who due to reduced business activity due to COVID, who cannot afford to fund the under insurance component of the claim. You know what comes next. Business failure.