Underinsurance ‘made worse’ by rising construction costs

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. However, with rebuild costs rising rapidly, 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.

RebuildCostASSESSMENT.com director Will Molland MCIOB AssocRICS, said: “The main factors at play here are pent up demand following Covid lockdowns and the re-starting of postponed building projects, as well as the impact of Brexit on imports from the EU.

“The loss of around 1.5 million foreign workers throughout 2020 and 2021, many from construction, together with increased demand in other countries for construction materials, such as high Chinese demand for steel and extended lead times for virtually all materials, have combined to create a perfect storm around rebuilding costs.”

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.

Will added: “It is unlikely that day one uplift or annual indexation will have allowed for these increases and, where a building sum insured is already on the low side, the rising costs highlighted will be increasing the potential for underinsurance.”

Rates used by RebuildCostASSESSMENT.com on commercial property are taken from the RICS BCIS service and are subject to indexation adjustments on a fortnightly basis, allowing for recent increases in material and labour costs. For High Net Worth (HNW) homes regular analysis of multiple data sources, including cost plans from building contractors, is reflected in rebuild rates used along with adjustments for current increases.

“It is expected that general building cost inflation at this level will inevitably hide a range of increases and the residential sector, particularly HNW and listed properties, will be particularly vulnerable to even higher rates of build cost inflation,” said Will.

Protect your organisation from the consequences of underinsurance

Thanks to our partnership with rebuild cost experts, RebuildCostASSESSMENT.com, you can quickly discover whether your property is insured correctly. Contact us today for more information.

This article is from RebuildCostASSESSMENT.com.

Good ventilation in the workplace can help reduce the spread of coronavirus

Reduce the risk of coronavirus as more people return to the workplace.

As coronavirus spreads through the air, the virus can build up in poorly ventilated areas, increasing the risk of infection. It is a legal requirement for employers to ensure an adequate supply of fresh air (ventilation) in enclosed areas of the workplace.

The Health and Safety Executive (HSE) recommends maximising the fresh air with the following:

  • Natural ventilation which relies on passive air flow through windows, doors and air vents that can be fully or partially opened
  • Mechanical ventilation using fans and ducts to bring in fresh air from outside, or
  • A combination of natural and mechanical ventilation

HSE has issued updated guidance on how to identify poorly ventilated areas and steps you can take to improve ventilation. It includes a video to help you.

HSE is carrying out spot checks and inspections by calling and visiting all types of businesses. Make sure your business is following the latest guidance and advice by visiting HSE coronavirus web pages.


Latest police data shows that £17.5m of tools were stolen in London last year

Almost £57,000 of tools were stolen every day in 2020, according to data from the Metropolitan Police.

The 2020 total of £17.5m was down 15% on the £20.7m worth of tools stolen in the capital in 2019. It might be reasonable to attribute this to Covid and the consequent reduction in activity.

There were 28,338 tool thefts reported across London between January 2019 and May 2021. That’s about 32 incidents a day.

It appears that thieves are 10 times more likely to steal powered hand tools than non-powered hand tools, with 32,067 taken from 2019 to 2021, compared to 2,993 non-powered hand tools. 1,942 garden tools were stolen in the same period across the capital.

Top 5 tips for preventing tool theft

  • Park against a wall – Aim to park with sliding or rear doors against a wall or sturdy fence so it’s difficult for them to be opened. You should park in busy, well-lit areas, and preferably in view of a CCTV camera.
  • Remove tools overnight – Nowadays, a lot of break ins can be from ‘peel and steal’ and electronic key fobs, so even well-secured vans are at risk. If you can, remove tools from your vehicle overnight to completely reduce the risk of losing them, even if an attempt is made.
  • Mark your tools – Having identification marks on your tools (e.g. from paint or permanent marker) makes it difficult for stolen tools to be sold on. It also helps to recognise you as the owner if they’re recovered.
  • Record serial numbers – Make a note of serial numbers, as well as the make and model of tools you own. Providing this to police in the event of them being stolen will help to identify your tools if they’re found, as well as easing the process of making an insurance claim.
  • Make sure you’re insured – Replacing your tools is likely to be expensive. Having insurance in place, whether standalone tools insurance, or as part of your business insurance policy, will help to support you with the sudden financial shock of tool theft. Check your policy and if you don’t already have tools insurance included, consider adding it on. You should also check your policy wording to find out exactly what’s covered, what the limits and excesses are, and if there’s any exceptions to be aware of.

If you have any questions or concerns regarding insurance for your tools, please don’t hesitate to get in touch.


What’s the difference between a labour only subcontractor (LOSC) and a bona fide subcontractor (BFSC)?

And when you need employers’ liability insurance.

What is a labour only subcontractor?

Labour only subcontractors are usually hired to assist with a build project when extra help is required.

Labour only subcontractors become part of your team and work under your supervision, using tools, equipment and materials provided by your business.

As they are employed for the duration of the build project, you are required to pay them the same wages as your full-time staff. You become responsible for their health and safety while they are at work. This includes making sure you have employers’ liability insurance.

What is a bona fide subcontractor?

Bona fide subcontractors are hired to complete a specific job—such as plumbing or electrical work—on a build project that your full-time staff is not capable of completing on its own. As your firm would be hiring them for a specific job, you would pay them as if it were a normal separate job, typically via invoice. In addition, because they are working independently of your firm, bona fide subcontractors should have their own liability insurance and invoices will include VAT.

Do I need employers’ liability insurance for contractors?

Employers’ liability insurance covers you in the event that one of your employees is injured or becomes ill due to the work they do for you and decides to make a claim against you.

In the majority of cases, employers’ liability insurance is a legal requirement if you have employees, this includes employees who work for you on a short term basis.

An exception to this rule is that you don’t need employers’ liability insurance if you only hire independent, self-employed bona fide subcontractors. So, check the criteria above to ensure you’re working with bona fide and not labour only subcontractors.

You do need employers’ liability insurance if you hire labour only subcontractors, even if you only hire them to assist you with one project.

Have you got it right?

If you’re unsure about employer’s liability insurance and the differences between labour only subcontractors and bona fide subcontractors, speak to your broker today for peace of mind.