Nick Symes on… Inflation in the property & construction sectorson
For a substantial period we have seen low levels of inflation in the UK. In the property and construction sectors, inflation is caused by a combination of labour and material costs.
As we move into a period of great uncertainty with issues such as Brexit, future inflation is hard to predict.
If your property suffers major damage it can take a number of years to rebuild it. Aside from the initial cause investigations, plans need to be drawn up, planning permission sought and tenders obtained before there is a spade in the ground.
Even at 3% inflation, if it takes three years to rebuild the property, this is an inflationary increase of 9%, which may mean the Sum Insured is insufficient to cover the total cost. Insurers maximum liability is the Sum Insured.
At Reich we ensure our property policies are on a Day One basis, with automatic built-in cover for inflationary increases during the rebuilding period.
To find out more visit http://www.reichinsurance.co.uk/our-services/residential-property/