Construction Companies Also Inadequately Insured

Construction businesses also need to be wary of rising costs, and double check they are properly protected from damage or theft.

Reinforcement materials alone have climbed from $1,330 a tonne in mid-2020 to $2,400 a tonne in April this year.

Most notably, the cost of timber, steel and concrete has climbed significantly.

While insurance policies often input an ‘escalation allowance’ of between 10 and 15%, this won’t currently be enough to provide adequate protection for many contractors, due to rapid inflation.

And in some cases, if an insurance contract is signed for a value that already exceeds the policy limit that was agreed, the contractor may not be entitled to an escalation allowance at all.

A good insurance broker should recommend you set your annual maximum project value limit each year with a buffer of about 10 – 20% so you don’t end up underinsured.

“But obviously, you don’t want to set your limit unrealistically high, as this will increase your premium and excess – and sometimes it can be a challenge to get this balance right,” says Jody.

If you are uncertain as to whether you are underinsured, best practice would be to get your property evaluated to check what it should be in your policy.

In partnership with MCG Quantity Surveyors, Oracle Group offers this service for a flat fee of $600+GST, which you can sign up to here.

Jody also specialises in construction insurance, and you can reach out to her to double check if your policy is up-to-date so you’re not left out-of-pocket if a disaster were to strike.

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General Advice Warning

This blog post contains general information only. It does not take into account your objective, financial situation or need. Please consider the appropriateness of the information in light of your personal circumstances.

Jody Williams

Jody Williams

Jody Williams is the perfect broker to select the right insurance on your behalf, saving you time and money. And the best part is – she works for you, not the insurance companies.

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