The industry is currently facing a perfect storm of historically strong housing demand and skyrocketing labor and materials costs. According to findings from the National Association of Home Builders (NAHB) household construction costs are rising. The increase in costs is directly related to the the increasing costs of building materials, especially the price of lumber. According to the NHB lumbers costs are up 340% from last year.
Starting this summer, Bolder Insurance customers will most likely see homeowners policies with a higher average premium renewal. The inflation guard component of a home policy increases each year to reflect the gradual increase in the cost to rebuild a home, ensuring that homeowners continue to have adequate coverage. However, with the current inflation in the housing market we anticipate that homeowners are going to experience higher-than-normal premium increase.
The historically low mortgage interest rates and the Covid-10 pandemic have also contributed to more home sales, and renovation projects causing an increased demand for building materials. Unfortunately this demand has caused supply shortages throughout the construction industry, causing greater demand, lower supply, and a huge increase in the price building materials. Unfortunately, with a surge in building material and construction prices this will most likely lead to higher homeowners insurance claim expenses, making it cost more to repair or rebuild a home following a loss. As a result, homeowners may find that their current policy limits and coverage are no longer adequate.
It is so important for homeowners to respond and take a few measures:
–Review your policy. Make sure you understand your homeowners policy. Does your policy have replacement cost coverage or actual cash value coverage? Does your policy provide a correct replacement cost or overall value for your home?
–Consider coverage adjustments. Contact one of our Bolder Insurance advisors to discuss if your homeowners policy might need an adjustment in coverage, such as changing the current limits, or obtaining specialized coverage or a policy endorsement.
–Keep your Insurance Advisors in the “know”. Make sure you always contact Bolder Insurance whenever you have renovated, or made improvements to your home ( e.g., remodeling your kitchen, adding an addition, building a deck). Your policy will most likely need to be updated.
Our Bolder Advisors are available to answer any of your insurance questions! Contact us today.
Disclaimer: Information and claims presented in this content are meant for informative, illustrative purposes and should not be considered legally binding.