How Rising Material Costs Are Affecting Construction Insurance

Arizona’s construction industry has seen steady increases in material costs over the past few years. Prices for lumber, steel, concrete and copper continue to rise, affecting budgets and timelines across all types of projects. These changes also influence construction insurance coverage and premiums. Here’s what builders and contractors should know about the connection between material costs and insurance.

How Material Costs Influence Insurance Premiums

When the cost of materials increases, the expense of repairing or rebuilding after a loss also goes up. Insurers factor these higher replacement costs into their premium calculations. As a result, many Arizona contractors have noticed rising insurance rates, even without recent claims. This trend can especially affect property, builder’s risk and inland marine policies that cover materials and equipment on job sites.

Adjusting Coverage to Match Current Values

With material prices changing frequently, reviewing your policy limits is essential. A policy based on outdated material values may leave you underinsured after a loss. It’s essential to update your coverage regularly so it reflects current replacement costs. This can help maintain sufficient coverage in case you need to rebuild or replace materials following a covered event.

Risk Management in a Changing Market

Higher material prices also increase the financial impact of delays, theft and damage. Strong risk management practices can reduce these risks and help control insurance costs. Builders may benefit from strategies such as tighter site security, controlled storage areas or just-in-time delivery to avoid unnecessary losses.

Learn More

Sonoran Insurance LLC follows market trends that affect Arizona’s construction professionals. Our team helps clients adjust their coverage and enhance risk management to align with current conditions. Contact us today to learn more.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.