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Personal Insurance

CONSTRUCTION COSTS ARE HIGHEST IN 50 YEARS

By February 23, 2022No Comments

As you know, Covid-19 has affected every tiny detail of our lives. This extends to building, renovation or reconstruction of homes and buildings.

The U.S. Census Bureau shows construction costs went up by 17.5% year over year from 2020-2021; largest spike in 50 years. US Census construction spending 2021 was 23% higher than 2019, before the pandemic.

The reasons are supply chain issues, inflation, labor shortages and other issues. The price of lumber jumped 85% in just the past 3 months.

The wait time for your favorite contractor would also be longer. They have raised their prices and can be pickier as to what jobs they want to do and when. You can refer to the following for more information: Construction Costs Hit Highest Spike in 50 Years

So, you add all this together and that means homeowner or commercial building claims are being affected by the increase in costs meaning the insurance carriers have had to update premium prices to accommodate the higher costs associated with a claim. They have also had to update their residential and commercial building cost evaluations to reflect the higher costs associated with new construction and reconstruction.

We can’t compare what we pay for a property to the cost of reconstruction. It’s like buying a car new then buying each piece and rebuilding it; the cost will be more.