Does Covid Affect Insurance Premiums?
Have you noticed your homeowners insurance premiums have recently increased? Are you wondering why, since nothing has changed about your dwelling to reflect the escalation?
Like with everything else these days, you can blame COVID!
It’s all about the lumber. Are you confused as to how lumber affects your homeowner’s premiums? Let me break it down for you.
The Coronavirus Affected Lumber Production Two Distinct Ways:
- It caused construction activity and sawmills across the U.S. to shut down, reducing lumber supply.
- When construction resumed a few months later, it rebounded more quickly than anticipated, creating a spike in demand that the few lumber mills still in operation, could not keep up with.
It’s a simple supply and demand scenario, causing construction costs to skyrocket.
How Does This Affect Your Policy?
How can Covid affect insurance? Your homeowners rates are determined by the coverage amounts in your policy. Your home’s rebuild cost is a crucial determinant of how much you will pay in premiums. Your home’s rebuild cost is relevant to the price of local construction materials, and when those costs increase, your dwelling limit needs to increase as well.
Most homeowner policies have some type of inflation guard built into the policy which increasesthe value of the home each year by 3-5%. Clearly, this does not reflect the current situation in themarket.
What Do I Do Now?
The big questions for 2021. The answer is simple. Give us a call. We can review your current values and policy to see if it meets your current needs. The professionals at The Charles Leach Agency will review your dwelling value and any home updates/improvements to ensure you have the correct amount of insurance coverage. Make sure you are not over-or under-insuring your home by calling 1.888.275.3224 now!