Do high building costs affect your home insurance?
As most are now aware, the cost of materials for building or improving a home has risen drastically during 2020-2021. In April 2021, the Bureau of Labor Statistics reported that steel mill products had increased over 18% for the month. Moreover, the National Association of Home Builders says that through April 2021 lumber prices had risen 300% over the past 12 months. Building costs have continued to be volatile and will probably remain so for a while.
There are several reasons for these spikes in price, from COVID related issues causing a slow-down in production to low interest rates and people working from home resulting in increased lumber demand for home projects. In addition, a plethora of natural catastrophes from Western wildfires to Southeast hurricanes added to the increased demand for lumber and steel among other building materials. All these factors led to an increase of $36,000.00 in the average cost of a new single family home.
All the above factors can result in your homeowners premium going up to help cover the increased costs of rebuilding. Additionally, your homeowners policy limit may now be too low to cover the cost of rebuilding your home. It’s imperative that homeowners review their coverage to ensure homeowners policy limits are adequate to cover insurance-to-value estimates.
It’s best to speak with your agent soon regarding:
- Whether you have replacement cost coverage or actual cash value coverage on your home.
- Adjustments to your homeowners policy limits for sufficient coverage in the event of loss.
- Updates, improvements or additions, that you have made to your home that increase the value
There is no time like the present to contact your FAPCO agent to assist you in making the proper adjustments to your homeowners policy. (Toll free number; 1-877-960-1457)