Building Costs Are on the Rise: How Can You Protect Your Business?

building costs are on the rise

Property rates and building costs are increasing, and there is little evidence that they will be trending downward any time soon. What can you do to minimize your financial loss and protect your business? To understand how to combat these growing issues, let’s explore some of the reasons behind the cost increase.

1. An increase in natural disasters and catastrophes

The total number of weather and climate events in 2020 swiftly surpassed the previous record of 15 in one year, wrapping up with a whopping 22 events. This has caused an increase in property damages and in reconstruction costs.

2. Lack of skilled laborers

The COVID-19 pandemic and surplus of reconstruction projects have caused a scarcity of experienced laborers, leading to slow and inefficient projects that take more time and cost more money.

3. Construction Cost Increase

Construction costs are increasing due to a shortage of building material combined with the factors mentioned above. Be sure that your insurance is keeping up with rising costs—a policy with a low limit may leave you vulnerable if your property cost has been increased past that point.

4. Inadequate Rates

An unprecedented number of weather events this year have caused insurance companies to reframe what they consider risk, and properties that may have once been regarded as low risk are now deemed of higher risk.

5. Inaccurate Valuation

Valuation is an economic value assigned to a property, and it’s vital that this information be accurate. You may be lacking coverage if your policy limit isn’t compatible with your property’s value, which can leave you vulnerable in the event of an increasingly likely disaster.

6. Reinsurance Increase

As events that generate loss trend upward around the world, so will the cost of reinsurance.

What Can You Do to Protect Yourself and Your Property?

As you may have noticed, part of the issue with the above-mentioned factors is that they often overlap and feed into each other, making it seem as though there’s little any one business can do about rising costs. However, there are still things you can do to minimize your losses.

One thing you can do is regularly get your property valued by a creditable source. As mentioned, an inaccurate property value can leave you open to losses that may otherwise be avoidable.

It’s also essential to stay in communication with your insurance agent about your property’s value to ensure that your limits correlate correctly to your property’s up-to-date valuation.

Avery Hall Insurance Agency is here to help. Contact one of our agents today to discuss how to get your business the best protection at 410-742-5111, or request a free quote right here on our website.

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