As it turns out, the pandemic is still affecting us even though life is starting to get back to normal. If you have an insurance policy for your home, you might want to learn about what’s going on in the world of homeowner’s insurance. Even if you haven’t had any problems yet, you may be opening yourself up to certain risks if you don’t take the right steps. Factors like an increase in extreme weather events, inflation, and bottlenecks in the supply chain can render an insurance policy inadequate if you haven’t updated it to reflect current circumstances. Keeping on top of your homeowner’s insurance is important not just for peace of mind, but as a part of being ready for whatever the future holds; that’s why some people decide to review their home insurance policy with a company like the Brad Siok Insurance Agency Inc. Brad Siok State Farm of Peoria, AZ just to make sure all their ducks are in a row.
Extreme weather patterns are impacting the cost of home insurance
From floods to fires, weather patterns and wildfire seasons present more risk than ever to homes all over the US. Depending on where you live, you may want to take a closer look at how well-protected your home is from natural events like these.
Consider this: the average cost of home insurance in Arizona is $1,189 yearly for $250,000 in dwelling coverage. If the average Arizona home was destroyed in a wildfire, would a quarter-million dollars be enough to not only rebuild the house, but to replace everything inside it? States like Arizona, Washington, Oregon, and California are known for wildfires, and the last couple of years have unfortunately reminded everyone of that. Most people can escape from the blaze in time, but there isn’t much they can do to save a house that’s in the path of the wildfire.
Except, of course, to make sure that the home is completely insured beforehand. A standard home insurance policy should include fire insurance, which covers everything from kitchen fires to wildfires. Even if you have a generous home insurance policy, it wouldn’t be a bad idea to confirm that it’s sufficient for the current level of risk from fire.
Many people consider flood insurance to be a splurge, but given the number of hurricanes we’ve seen in the last couple of years, they might want to make that an essential item in the budget. NOAA’s definition of the Atlantic hurricane season includes 14 named storms; it was recently increased from 12 storms. Guess how many storms there were in 2021, though? There were 21 of them. That might seem like a lot compared to the average Atlantic hurricane season, but that pales in comparison to the 30 named storms recorded in 2020.
Inflation can make it more difficult to replace your belongings
You probably already know that prices are increasing; you can tell that every time you put gas in your car or go grocery shopping. People aren’t just spending more money on gas and rotisserie chickens, though; they’re also spending more on home furnishings.
From November 2020 to November 2021, the cost of certain home furnishings grew by 14% nationwide, which was about double the national rate of inflation. If you’re buying a new living room set or renovating the dining room, the recent increases in furniture costs probably won’t completely eat your lunch. However, if you’re having to replace everything you own because it was damaged or destroyed, the inflation rates could be a problem.
This is why you want to have replacement cost coverage for your home and belongings, not cash value coverage. Say your home and its contents are badly damaged by flooding, and you file an insurance claim to that effect. If you have cash value coverage, you’ll only get paid for the current value of your belongings. Assuming they aren’t all brand-new and high-quality, you’ll only be paid a fraction of what it’s going to cost to replace them. If you have replacement cost coverage, though, you’ll be able to replace everything that was lost without spending a ton of money out-of-pocket.
If you aren’t sure where you stand, a home inventory is a good place to start. This includes furniture, décor, clothes, and whatever else you’d have to replace if everything in the house was damaged. You may decide that your current home insurance policy is sufficient for your needs, but if not, that’s something you should probably be aware of.
Supply chain bottlenecks are impacting homeowner’s insurance claims
The story starts with the construction industry. In 2021, a combination of inflation, labor shortages, and supply chain disruptions conspired to create serious delays in the construction of new homes. Construction companies couldn’t get their hands on the materials they needed, because the pandemic had created production and shipping delays for raw materials. They also had a hard time hiring enough crew members to build the houses, so even if they had all the materials, the structures went up way behind schedule because the manpower simply wasn’t available. Inflation played a part too, because if a construction project ended up going over budget, it might be delayed until further funding could be secured.
While the typical homeowner doesn’t spend much time thinking about logjams in the construction industry, they sure will if they ever need to do extensive repairs on their home, much less replace it altogether. With the construction industry buying up everything they can get their hands on, it would be especially difficult for a homeowner to get what they needed. If they’re in a region that’s disproportionately affected by wildfires or flooding, there’s even more competition for limited building resources.
Even though you can’t do much about not being able to buy lumber, you can still get extended or guaranteed replacement cost coverage to cushion the blow. This gives you time to figure out the best way forward, and ensures that you won’t be left high and dry due to circumstances beyond your control.