Zurich Replacement Value Cost Trends

Real Property * Personal Property

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 for Zurich. The cost trends are published to assist in maintaining proper levels of insurable replacement costs for commercial and industrial properties. Please consult insurance advisors for specific information regarding your situation. The cost trends will be issued on an annual basis going forward.

January 2020 Cost Trends Analysis

The cost trends show an average annual increase in construction cost inflation for the year ending January 2020 of about 2.0%. The Regional breakdown shows an increase in costs in the range of 0.7% to 4.1% based on local conditions. Markets are continuing to struggle to meet demand for labor. Skilled labor shortages, material cost fluctuations and shortages continue to be main drivers of inflation. Foreign trade negotiations on select materials, especially steel, are creating concerns on construction costs. Construction activity remains high and may put more upward pressure on costs.

The personal property cost trends indicate a 2% to 4% increase in machinery and equipment costs for the listed plant occupancies over the prior 12-month period.

Real property

Inflation multipliers are provided for all 50 states, Puerto Rico and eight Canadian provinces. In all, cost trends are included for 183 cities. Prior to January 2013, the cost trends are available on a regional basis.

To determine the most 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 closet city and note the multiplier. Multiply the factor provided by the existing estimated replacement cost to arrive at the most current estimated replacement cost.

Personal property

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 where last updated or established and note the multiplier. Then apply the appropriate multiplier to the existing personal property values to approximate the most current replacement cost.