Is your household rebuild cost sufficient?

The cost of building materials and labour have increased considerably in the past 12 months due to a number of COVID and Brexit related factors. Temporary shut downs of many suppliers has led to shortages of some materials and this coupled with increased demand due to lockdown home improvements has let to sharp price increases. Brexit has also led to imported building supplies being held up on their way to the UK which has contributed to the shortages.

Homeowners have been spending more money on home improvements due to large sums of money saved up during lockdown from not going on holiday and not spending money on socialising or commuting. This has created huge demand on local builders and many have been able to increase their labour charges as a result.

A knock on effect of this is that many home rebuild costs may not be sufficient in the current climate. We would strongly recommend that all clients take time to review their rebuild costs for their properties carefully and if necessary make an adjustment to the policy mid-term to prevent underinsurance. Some of our panel of insurers have let us know that they will be increasing the percentage level of indexation that is applied to household sums insured at renewal. Indexation is the percentage at which sums insured are increased upon renewal to try and keep pace with inflation including price increases for labour and building materials. One insurer has increased the % used from their standard 4% to 6% and we expect that most other insurers will also follow suit with similar increases.

If you are concerned that your rebuild cost may be insufficient then we would strongly recommend that you seek professional advice from a chartered surveyor who can provide a professional report advising you on the appropriate rebuild cost for your property. Please call your local office if you need any further advice related to the contents of this article, or our head office on 0191 232 1151.