Properties May Become Underinsured as Costs Of Building Materials Rise
Many commerical and residential properties around the country may have become underinsured because of significant increases in the costs of building materials such as cement and steel, as well as other commodities used in the construction process, the NAHB Commercial Builders Council recently advised its members.
This can have significant implications for insurance policies that are subject to coinsurance or margin clause provisions, according to an article appearing in the council's Sept. 14 e-newsletter. With a more than 10% increase in the cost of building materials over the past 12 months, building owners who simply renew a policy from the previous year without reviewing their coverage for replacement costs could find themselves under-insured in the case of a loss.
"The recent rise in materials costs should serve as a wake-up call to property owners to review not only their insurance coverage, but also how coverage amounts were calculated," says At Risk, an online publication of Marsh Risk Consulting.