You have no doubt felt the impacts of rising inflation. Everything from gas to food to utilities is on the rise, and while assets such as real estate and collectibles usually keep up with inflation, you need to be sure your insurance coverage limits adjust to the increases. Various industry and government indices put property replacement cost estimates up by 15% to 21% year-over-year. This increase is driven by extreme material cost surges such as:
- Copper Wire +156%
- Plywood +88%
- Copper Pipe +65%
- PVC Pipe +45%
- Lumber +41%
- Asphalt Shingles +6%
- Labor +5-7% depending on trade
It’s clear most of the costs associated with repairing or rebuilding a property following a loss are far exceeding the general rate of inflation, which is already at levels we’ve not seen in decades.
Inflation guard is a coverage endorsement that automatically increases your policy’s dwelling coverage limit to to account for rising construction and labor costs in your area. This coverage is usually built into standard homeowner’s insurance, but it’s possible you’ll need to add it as a separate endorsement to your policy.
If you noticed your insurance premium went up at your annual policy review, it may be because of your policy’s inflation protection. At Avery, our goal is to ensure that our customers’ coverage is not outpaced by inflation and coverage is adequate to protect against a property loss.
There are three other coverage options that could protect you from increased rebuilding costs.
- Ordinance or law coverage: Optional coverage to help pay for the costs to build your home back up to code after a covered loss or if your home is older and isn’t up to code.
- Extended replacement cost coverage: Extends your replacement cost coverage anywhere from 25% to 50% past your coverage limit in the event rebuild costs surge, like after a natural disaster or unprecedented inflation.
- Guaranteed replacement cost coverage: Pays to rebuild your home from the ground up even if the costs exceed your dwelling coverage limit.
Contact us to review your current coverage limits and we’ll help eliminate any confusion and help you sleep soundly knowing your assets are protected.