It takes little effort to recognize the pain of inflation when we stop to pump gas or check out at the grocery store. The increased cost of living has become widespread and continues to rise, from transportation and food to healthcare and housing.
The cost of building materials in particular has been increasing significantly and continues that trend at unprecedented levels. The reasons are complex but include COVID, a severe disruption to the supply chain, the struggle to find workers at our ports and warehouses, and a scarcity in truck drivers to transport the goods. Recently, with lumber prices already significantly higher than pre-COVID prices, the U.S. Department of Commerce doubled tariffs on imports of softwood lumber from Canada — a nearly 200 percent increase since last spring. This has sent building material prices soaring, adding tens of thousands of dollars to the price of homes.
Even if you aren’t looking to have a house built or modify your existing home, homeowners have good reason to take heed of these latest developments. Unfortunately, the inflated cost of building materials is set to affect your home insurance rates.
When was the last time you evaluated how much it would cost to rebuild your home? Chances are that number is much higher than you would expect. Your home’s replacement cost estimate (the price to rebuild your home to the same level) is based on reconstruction and current lumber costs. As building material prices increase, so too does your replacement cost estimate, and, therefore, your premium. Insurance premiums, being derived in part from the projected cost to redress loss following a claim, is rather predictable, and most insurance companies typically trend in the same direction.
As a policyholder, can you expect a price hike on your home insurance come 2022?
The short answer is yes. Premiums will be rising across the board, and property limits on policies with dwelling/building coverage can be expected to increase.
Rest assured that we are here for you. Keeping with our philosophy of “from our family to yours” through four generations, we remain committed to offering you the highest quality protection for the best price.
There are several home insurance discounts and credits available to you that you might not have leveraged. These include: claims-free discount, multi-policy discount, non-smoker discount, retirement credit, and longevity discount. Fire/smoke detectors, generators, a water detection/automatic shutoffs, and alarm systems and/or monitored burglar systems can also decrease your home insurance premium. Also, there are traditional ways to reduce your premium by increasing deductibles to a level with which you are comfortable.
If you have any questions or would like us to review your current policies, please give us a call at 845-986-1177.
At Seely & Durland Insurance. we are your business, home, auto, and life insurance solutions provider, partner, and adviser, serving Warwick, Greenwood Lake, Florida, Pine Island, Goshen, Middletown, Chester, Monroe, Newburgh, Orange County, and the Hudson Valley and Tri-State Area.