Consequences of Inflation on Construction Businesses
Inflation and the cost of living crisis has had a number of trickle-down consequences for the insurance landscape. At Romero Insurance Brokers, we’ve reported on how inflation has greatly increased the risk of underinsurance for big businesses and SMEs. Yet, inflation and the cost increase of materials has also affected the day-to-day workflow of construction workers and private contractors. Tradesmen must now be alive to price changes as they factor in the cost of materials into their quotations.
Indeed, many of us will not possess an abundance of spare funds post-pandemic. It’s caused work to dry up for tradespeople; a stark contrast to the home-improvement surge witnessed during lockdown one. And despite the genuine need, many contractors are claiming against the materials and equipment that are not being used.
Materials and tools are becoming scarcer and more expensive, putting them at a higher risk of theft. According to Direct Line Group, nearly half of all tradespeople have had their tools stolen, with the majority stolen overnight.
The spike in claims for tool theft has meant the value of claims has risen, resulting in increased scrutiny from insurers. Despite the spike, only a quarter of tradespeople have a specific insurance policy which protects their tools kept in their vehicle overnight. This means getting good insurance, without the assistance of a broker, will be much more difficult and more expensive.
Protection Against Fraud
The Insurance Times offered insight into how inflation has also led to a rise of potentially fraudulent claims. Due to material costs escalating exponentially, it’s been reported that customers can no longer afford work to be completed, and instead of properly acquiring funds to continue construction, they are opting to destroy it and claim against the damages, having insurers pay the fees.
The newly enhanced scrutiny of construction claims from insurers is bad news for construction businesses. Genuine claims will take longer to approve and insurers may be less likely to pay out. These issues can be resolved through the services of a broker.
Why a Broker is Essential
Insurers are looking out for value inflation and so using the services of a broker will greatly increase your chances of receiving the correct valuation for your tools and materials. Insurers are also on high alert for false documents and bank accounts. Having a broker negotiate claims on your behalf offers both peace of mind and credibility.
Good brokers use their relationships with insurers to help push through claims and validate documents. Great brokers utilise their in house claims team and decades of experience to navigate the current insurance landscape. At Romero Insurance Brokers, we build on both our excellent relationships with insurers and our internal teams to offer maximum support to construction businesses and tradespeople looking to make a claim.
For comprehensive protection, dedicated service and advice, contact Romero Insurance Brokers today.
HOW INFLATION INCREASES RISK OF UNDERINSURANCE
Costs included in a claim, such as replacement materials and labour, will in future be much higher than expected. This leaves commercial businesses at the possibility of underinsurance.
Learn about the risks of inflation and how it could have a significant impact on policyholders.Learn more