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Commercial Construction Costs Up 11 Percent - Are Your Clients Adequately Insured?

The cost of replacing an existing property has increased substantially in recent months due to rapidly rising prices for building materials such as steel and...
August 4, 2004

The cost of replacing an existing property has increased substantially in recent months due to rapidly rising prices for building materials such as steel and cement. Willis Group Holdings, a London insurance broker, has released a report indicating that construction costs for commercial and industrial buildings in the U.S. have increased 11 percent over the last year.  The report attributes the higher cost to unprecedented increases in the prices of steel, cement and petroleum products, as well as transport.  The report also notes that the current building boom in China is increasing the demand for building materials.  Willis estimates that property owners in the U.S. who did not revise building values when they renewed their insurance could be underinsured by approximately 11 percent.  The Insurance Information Institute (III) advises that property owners who have not considered the higher cost of replacement when purchasing or renewing one-year insurance policies may be underinsured -- and could, when filing a claim, discover that the replacement value stated in the policy is inadequate.

What It Means to Agents:  All PIA members should share this information with all their clients, as it pertains to any property insurance, commercial as well as personal. The message: "Property costs are rising, make sure your coverage keeps pace!"

Keep Coverage Up to Date - Avoid Underinsuring (III Press Release)

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