Beginning with the supply chain issues and shortages brought on by the pandemic, costs in all major economic sectors have continued to rise with record-setting inflation, including the cost of construction and labor.
Additionally, heightened severe weather activity over the past several years has resulted in widespread property loss and increased demand for materials and labor in an already inflated market.
Insurance coverage amounts aren’t based on the market value of your home, but rather the amount it would cost to rebuild it in the event of a total loss. As the cost to rebuild a home increases, so does the cost of the insurance you buy to cover it. Insurance providers use valuation tools to determine how much coverage your home needs based on several factors, such as home style and building materials.
Valuations typically increase 3% in a year, but increased around 9% in 2022 and are forecasted to increase 14.3% in 2023. This means that insurance providers everywhere must now adjust rates accordingly in order to confidently cover potential losses suffered by policyholders.
If you experience a loss and need to file a claim, ensuring that you have adequate coverage to repair the damage is our top priority. Without increasing coverage amounts to compensate for inflation, the cost of repairs could easily exceed your existing coverage limits. Talk to your agent for more information about steps you can take to reduce your premium.
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