“Instead
of the usual 1 to 2 percent annual increases, we’re now
seeing 2 to 3 percent increases quarterly, or even monthly."
Why
are the Building Limits on My Policy
Increasing So Much?
Many
customers are asking why the building limits
for their commercial policies have increased
so much. The answer is found at local lumber
yards, where 2 x 4s can’t be kept in stock
long enough to fill the orders pouring in, and
at ports, where ships laden with steel head
across the Pacific.
Over the past
year, skyrocketing prices for lumber, steel
and related building materials have driven
average building costs up 8 percent
nationally, and in some areas closer to 15 to
20 percent.
These
increases far exceed the normal inflation
rate. “Prices have changed faster than
I’ve seen in my 18 years in this
business,” says Fausto Martin, Safeco
National Director of Property Claims.
“Instead of the usual 1 to 2 percent annual
increases, we’re now seeing 2 to 3 percent
increases quarterly, or even monthly. Repairs
on a damaged building made for $110,000 or so
a few months back may now cost anywhere from
$120,000 to $125,000.” “You can’t
be using information from last October to
establish replacement costs today.”
