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Is your homeowners policy sufficient to cover rising rebuilding costs?

Inflation, supply chain issues, an increased demand for skilled labor and construction materials… all have combined into a “perfect storm” resulting in a significant increase in the costs to rebuild a home. Given that fact, it’s only prudent that homeowners review and, if needed, update their insurance to keep pace with rising costs.

Rising interest rates and persistent disruptions in the building-materials supply chain can affect repair and replacement costs for purposes of homeowners’ insurance. However, a recent survey found that approximately two-thirds of insured homeowners could be without key additional coverages – including automatic inflation guard, extended replacement cost, and building code/ordinance coverage – that could more effectively protect their investment.

Most homeowners’ policies today cover replacement cost for structural damage, but it’s wise to check your policy – especially if you have an older home. A replacement cost policy will pay for the repair or replacement of damaged property with materials of similar kind and quality.

The limits of your policy typically appear on the Declarations Page. Your insurer will pay up to the limits of your policy to rebuild your home. If the limits of your homeowners’ policy haven’t changed since you bought your home, you may be underinsured – even if you haven’t made any upgrades.

Many insurance policies include an “inflation guard” clause that automatically adjusts the limit to reflect current construction costs in your area when policies are renewed. If your policy doesn’t include this clause, see if you can purchase it as an endorsement.

Adding to the threat and potential costs is the steady growth in natural catastrophe losses in recent decades.

Here at DPM Insurance Group, our brokers and CSRs are more than happy to review your existing policy with you in order to give you the protection, and peace of mind, you want. Click here to find the DPM office most convenient for you: https://dpmins.com/locations/

 

Source: Triple-I

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