July 4, 2023

Is your business keeping up with rising building costs?

With a changing industry over the last three years, its important now more than ever to be covering cost in your business.

Over the past couple of years, we have all noticed the rise in business running costs, especially following the COVID-19 period. Wages, rent, bank repayments, and, yes, insurance premiums have all gone up.

While some of these changes are somewhat expected, an area of increase often overlooked is the rebuild costs to property owners.

With the recent rise of inflation, labour shortages and availability of materials, we have seen building costs increase by almost 20% in just two years. That's a staggering amount!

What's driving these cost increases?

When you look at the building industry as a whole, there are several factors driving these increases:

  • A shortage of skilled labourers
  • Supply shortages due to a construction boom and many states' infrastructure projects
  • A backlog in production due to product unavailability
  • Material costs have risen –steel alone will increase between 3-7% in 2023!
  • Increased energy costs have caused the production costs of some materials to go up

Where does this leave you?

Due to the fast rise in construction costs, many property owners are finding a gap between the insured value of their property and the actual cost of replacement, leaving them underinsured and financially exposed. 

What can you do?

We recommend reviewing your sums insured annually or after you have completed renovations to your property.

For added peace of mind, you could take it one step further and obtain a property valuation from a professional quantity surveyor or property valuer.

Quantity surveyors are experts in accurately estimating project costs by preparing detailed cost plans and budgets considering all project elements. In turn, helping to ensure your insurance covers you correctly. 

How can Informed Insurance help you?

We will help you by-

  • Discussing the adequacy of your insurance coverage
  • Identifying the right cover
  • Tailoring the cover to your specific needs
  • Recommending the appropriate insurer for you

Reviewing your sums insured is a simple step to safeguard your financial security and protect you against unexpected events and cost rises.  

According to CoreLogic researchers, we can expect these rises to continue. If you'd like to take a deep dive into CoreLogic's research, click the link below.