How Rising Construction Costs Are Affecting your Insurance Policy
Posted in News & Updates
The COVID-19 pandemic has had a lasting impact on many industries, and the construction sector is no exception. Since 2020, the cost of construction and reconstruction—including materials and labor—has surged dramatically. Disruptions in the global supply chain, shortages of critical building materials, and a sharp rise in demand have pushed prices to new heights. Lumber, copper, steel, and even concrete saw significant price hikes, while labor shortages drove wages up for skilled workers. These increased costs have made it more expensive to repair or rebuild homes and condos, creating a ripple effect that has significantly affected insurance policies.
As the cost of rebuilding properties has climbed, so too have insurance premiums. Master condo insurance policies, which cover the structure and common areas, are particularly impacted because they often need to account for the increased costs of reconstructing buildings. Homeowners’ insurance policies also reflect this new reality, with higher premiums to cover the inflated costs of materials and labor. Insurers are adjusting their rates to ensure they can meet the increased financial obligations when claims are made, leading to rising costs for policyholders. For property owners, understanding these dynamics is crucial in managing insurance costs and ensuring adequate coverage in today’s inflated market.