Zurich is committed to providing experience and insights to help customers and producers better understand and prepare for the evolving risks they face over time. This issue of Zurich's replacement value cost trends provides the results of the most recent real and personal property inflation survey conducted by Zurich. The cost trends are published to assist in maintaining proper levels of insurable replacement costs for commercial and industrial properties. The cost trends are issued bi-annually in January and July.
January 2014 cost trends analysis
The current building construction cost trends show an average cost increase of just over 1.8% for the six months ending January 2014 and 3.1% for the year. Increased activity in the construction industry has allowed overall costs to move upward at a faster pace than has been seen in recent years. The overall construction market has increased over the past year with increases from 5% to 25% depending on the sector. Labor and material prices both contributed to the increase in inflation.
The personal property cost trends indicate overall percentage increases in machinery and equipment costs for the listed plant occupancies. The most recent survey of machinery and equipment costs showed costs remained flat for the last six-month period. It is anticipated the costs will increase slightly over the next six-month period.
Inflation multipliers are provided for all 50 states, Puerto Rico and eight Canadian provinces. In all, cost trends are included for 184 cities. Prior to July 2009, the cost trends are available on a regional basis.
To determine the current replacement cost of a building, select the closest city from Zurich's replacement value cost trends. Find the date across the top of the page that corresponds to the last time the existing values were updated. Scroll down the page to the closest city and note the multiplier. Multiply the factor provided by the existing estimated replacement cost to arrive at the current estimated replacement cost.
for the January 2014 real property cost trends.
The personal property cost trends are calculated by use of a weighted index and include an installation factor.
For personal property, choose the occupancy and scroll down the page to the date closest to when the existing values were updated or established and note the multiplier. Then apply the appropriate multiplier to the existing personal property values to approximate the current replacement cost.
for the January 2014 personal property cost trends.
Zurich's property valuation experience
It's more than insurance appraisals It's about helping you stay protected
Zurich's property valuation services are about making sure your insurable property values are reported accurately. With up-to-date valuation data and consulting tools, our seasoned valuation team is helping to create insurance programs that more accurately reflect the true value and exposure for property insurance, while at the same time simplifying the ITV (insurance to value) process.
- Certified valuation professionals dedicated solely to property valuation
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Customized services that address your needs
- Detailed on-site appraisals for real and personal property
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Up-to-date cost trending
- Publishing real and personal property cost trends that are updated bi-annually
Questions and comments
Richard Lunt, Property Valuation Manager