Housing-related costs are up; is your coverage?
Inflation hit 9.1 percent in July. Combine that with the supply chain issues and rising construction costs over the last two years, and it’s safe to assume the cost of replacing your home and property has also taken a big jump.
It’s a good time to revisit your insurance situation. A majority of homeowners across the country have not taken steps to ensure their coverage is keeping up with rising inflation, according to a new APCIA/Harris Poll survey.
A few more notes from that survey:
- The price of construction materials rose by 44% from December 2019 through December 2021, but only 30% of insured homeowners purchased more insurance or increased their coverage limits to compensate for rising building costs.
- Among insured homeowners who completed renovations or remodels during the pandemic, only 40% updated their home insurance to account for those changes.
Additionally, the Bureau of Labor Statistics reported in May that building materials prices have increased 33% since the start of the pandemic in 2020.
Here’s what you can do to make sure your insurance coverage is on par with these increases.
Talk to your insurance provider about:
- Replacement cost coverage, which provides the coverage necessary to rebuild your home with comparable materials.
- Automatic inflation guard, which adjusts your coverage automatically to keep pace with inflation.
- Building code/ordinance coverage, which helps cover the cost to meet new building codes or green energy ordinances.
- Extended replacement cost coverage, which increases your coverage to rising labor and material costs.
- Additional living expense coverage, which provides higher limits to cover temporary housing and additional food costs if the timeframe to rebuild is longer than expected.
You should also keep an inventory of your home’s contents in a safe, accessible place to provide to your insurer.