What To Know About Inflation And How It Affects Your Homeowner’s Insurance Coverage
Inflation has been a huge problem for homeowners throughout 2021 and 2022, due to rising costs of building materials required for repairs and renovations. Due to supply-chain problems and other factors, the prices on nearly all consumer goods have steadily risen. As a result, the cost to repair and rebuild a home simply costs more than it did just a few years ago.
At the same time, homeowner’s insurance premiums continue to climb – adding to the financial headaches for homeowners that simply want to keep their homes insured and repaired as needed. Given the current issues in today’s market, this is a good time to review your insurance policy to make sure the coverage limit accurately reflects the full replacement cost in the event of an emergency. (Replacement cost is distinct from the home’s retail market value, meanwhile, which is a crucial distinction to make.)
To account for inflation, most home insurance policies will include an inflation protection endorsement. This will automatically adjust the coverage amount each year based on inflation factors. The goal is to help home insurance coverage keep pace with inflation costs involved with construction materials and contractor services.
With the dramatic increases in costs since 2021, adjustments for inflation factors should have been larger than normal for most insurers in 2022. (The “inflation factor” is a measurement that insurers use to adjust coverage limits based on the anticipated inflation rate.) The inflation factor can vary each year and vary by geographic area as well. For an area like Florida that has been especially hard hit by rising costs, the adjustment is critically important. Florida homeowners want to be especially careful to make sure their insurer is properly accounting for current inflation trends.
Additionally, homeowners should make sure their policies and coverage account for any home improvements or upgrades they’ve made to the property. Considering the high costs homeowners have had to bear when remodeling in recent years, they want to make sure they get that money back if disaster strikes.
When home insurance coverage, homeowners must also understand the difference between “insurance to value” and market value. Insurance to value compares the policy coverage amount to the cost of rebuilding a home. It should match the amount of coverage that is needed to rebuild factoring in updated construction costs. If a home is insured at less than 100% “insurance to value”, a homeowner could be left shorthanded in the event of a total loss event.
Our Florida Property Damage Attorneys at Bundza & Rodriguez, P.A., Are Here to Help if Inflation Costs Create a Problem With Your Insurer
With costs continuing to rise in all areas, Florida homeowners are feeling the pinch. It is critical to make sure not only that your policy accurately reflects current costs and trends, but that you fight back if your insurer tries to save costs at your expense. The Daytona property damage insurance attorneys at Bundza & Rodriguez, P.A., can help if you believe your insurer is playing games or not accurately updating the terms of your policy to reflect market costs. If you have any questions or concerns, call our Daytona law offices today at 386-252-5170, or schedule a consultation with our Daytona Beach property damage attorneys online.
Source:
wptv.com/money/real-estate-news/citizens-property-insurance-rates-will-soon-climb-for-thousands-of-florida-residents
