Why are home insurance payouts falling short?
Construction-sector inflation has made the shortfall worse on a "magnified scale," as construction goods have greatly increased.
The increase in home replacement costs has far outpaced price gains in other sectors, rising by 55 percent between 2019-2022.
Homeowners should check their insurance policies
Homeowners need to make sure they have adequate dwelling coverage, which covers the cost of repairs or replacement in the event of a catastrophe. Some insurers automatically update policies to account for inflation, but many do not – so homeowners need to check providers to find out if the policy has been changed to cover the present-day costs.
In addition, homeowners should give their policy special scrutiny if they live in a region where floods, wildfires, and tornadoes are more common.
But all homeowners, no matter where they are, need to inquire in writing for specifics about replacement costs and payouts.
The type of home insurance upgrades that should be examined
Replacement-cost coverage, which automatically covers more than the estimated cost of your home, thereby buffering against inflation, should be examined as well as extended replacement-cost coverage.
This document is designed for general information only. The information presented in this document should not be construed to be formal legal or tax advice nor the formation of a lawyer/client relationship.
For more information on this and other topics, please contact Kevin via any of the channels listed below:
📧 kevin@kmckernan.com | 📞 718-317-5007