Inflation is no secret, and after the past few years, it has hit us all fast and hard. Let’s take a look at some reasons why inflation is affecting your home insurance premiums.
During 2020 when the world shut down, we all experienced a supply chain shortage and felt the impact of increasing prices on materials and labor. However, the truth is it went up and never really came down. According to Travelers Insurance Company, materials for new construction increased by 18.6%, roofing materials increased by 16.3%, and lumber prices increased by 6.2%. Not only did the prices of materials increase but so did labor costs. According to Grange Insurance, there is over 400,000 job openings in the construction industry alone contributing to the labor storage and the increase cost of hiring someone to do the repairs.
Aside from the impact covid had on the economy, the world also saw a rising number of weather-related disasters. According to the Travelers Insurance Company, in 2021 alone there were 20 separate 1 billion dollar weather related losses here in the US. As of right now, there have been nine weather-related losses in 2022.
Remember that even though you have not had any claims this past year someone has, and insurance is essentially the “law of large numbers.” All this will more than likely affect your home insurance premium if not this year more than likely next year as most insurance companies have taken higher-than-normal rate increases in order to have the reserves necessary to cover these catastrophic claims when they happen.
Be sure to contact your insurance advisor to keep your home’s value updated and ensure that it is fully protected.