A sustained rise in construction costs this year is increasing the likelihood of significant underinsurance of buildings in the UK.

Recent data from RebuildCostASSESSMENT.com has highlighted how on average, buildings are covered for just 68% of the amount they should be in Britain.

With rebuild costs rising rapidly however, the current situation is likely to be even worse.

According to the Builders Merchants Federation (BMF), prices have risen by between 10% and 15% for products and materials this year. However, some products, such as timber, have seen prices go up by 50% and by as much as 100% for oriented strand board (OSB) and other sheet materials, which are all key housebuilding components.

Indexation adjustments

Between July 2020 and July 2021, the cost of materials rose by 20%, according to the Office for National Statistics (ONS). The RICS’ BCIS general building cost index is forecast to be 8.8% for the year to September 2021, up from 3.6% for the year to March 2021.

Menu