Inflation: A Pickle for Property Insurance

All of us are feeling the grip of inflation. Building materials costs have spiked over the last 2 years. Supply chain disruptions and labor shortages are causing major delays in construction projects. As a result, it now costs more to rebuild your home than it did before. 

 

When was the last time that you checked your policy limits? Are they high enough to cover a 26% increase in building costs? If not, then you have to pay the difference out of pocket.

 

Hanover Insurance Company shared some of the numbers behind inflation in a recent post.  They recommend that policyholders consider

 

• Increasing coverage to avoid potential gaps in the current market
• Include the cost of any recent renovations in your policy limits
• Consider higher deductibles to help offset the cost of policy limit increases

 

The insurance industry is working to help policyholders stay ahead of the curve. Many carriers are running Replacement Cost Estimates on covered properties and adjusting property limits as needed. 

 

They are also increasing the Inflation Guard percentage on Property policies as well. Inflation Guard endorsements increase Property coverage limits by a specified percentage (usually 4%) at each renewal. Lately, carriers have increased Inflation Guard percentages to 8% and even 12%. 

 

Now is a great time to review the Dwelling limit (Coverage A) on your Homeowner's policy.  Review your policy renewal to see what changes are being offered and whether they are adequate to properly protect you. 

 

Let us know how we can help!