Why Contractors Should Factor Inflation Into Their Equipment Valuations

The COVID-19 pandemic and ensuing supply chain disruptions, labor shortages, and economic inflation have created a perfect storm in the contractor’s equipment market. Demand for equipment is very high, but supply is limited – and this has a knock-on inflationary effect on equipment values and the limits of insurance that contractors should buy to protect themselves. “The COVID-19 pandemic was the launching point,” said Heather Frain (pictured), Senior Vice President and Head of Inland Marine for Amwins Specialty Logistics Underwriters (ASLU). “With disruptions and bottlenecks in the supply chain, production of new equipment slowed, and demand for used equipment skyrocketed.” According to the Associated General Contractors of America (AGC), the producer price index (PPI) for construction machinery and equipment jumped 10.1% in 2021, compared to a 1.1% jump in 2020. It is important that contractors acknowledge those price increases in their equipment valuations so that they are not left underinsured, Frain told Insurance Business. READ FULL ARTICLE>>