I am sure by now we have all noticed higher prices at the grocery store, gas pumps, as well as everything else. Lumber, steel, insulation, and building supplies in general are not immune to this period of rapid inflation. Inflation always follows periods of prosperity or in this case rapid infusion of money, essentially watering down the buying power of the consumer. If we combine inflation with the effects the pandemic has had on the supply chain, we have a perfect storm of higher prices.
Over the past two months I have been working with our farm carriers on building valuations issues.
The reason we are reaching out to each of our farm & ranch clients is to make you aware of the rising cost of replacing outbuildings on the farm. If we have selected replacement cost on one or all of your buildings there is most likely an inflation factor attached to that item. This inflation factor will automatically increase the coverage each year to that factor usually 1-3% (standard in the past). In this environment it is challenging to keep replacement cost valuations at market values without causing a co-insurance penalty. Several of our farm carriers have announced their new inflations guard factors at 5-9% at renewal. We are working closely with our farm carriers to see if there is some leniency in the event of a loss for co-insurance penalties, because it was not our intent or yours to underinsure the buildings.
Even if you have just done a farm review or are curious about the coverages of one or all of your buildings, please reach out to your agent at your earliest convenience to review coverages and valuations.