A study from Towergate Insurance Brokers suggests that more than 90% of commercial properties are not insured properly due to rising rebuilding costs.
Citing a recent 20% increase in the cost of materials, Towergate said that many businesses could be put under financial strain if forced to rebuild. The broker company also pointed to more-recent research that suggested buildings were only covered for 68% of their rebuilding costs.
Robert Lewis, corporate broking director at Towergate Insurance Brokers, said: “In the simplest terms, buildings should be insured for the amount that it would cost to rebuild them. However, this shortfall in cover is being fuelled by a sustained rise in construction costs.”
He added: “We find ourselves in a perfect storm. The cost of energy is increasing rapidly, which has a major impact on production costs, there is huge demand for building materials, fuelled by a surge in projects here and elsewhere in the world, Brexit and the pandemic have seen a huge drain of foreign workers from the UK, as well as ongoing, well-documented supply chain issues.”
He went on: “And while people might be aware of all those factors generally, they could be forgiven for not realising what a big impact they’re having on construction costs and subsequently, on their insurance.”
