Is Your Home Covered When Disaster Strikes?

Need to Keep Pace with Rising Inflation

Need to Keep Pace with Rising Inflation

The Insurance Journal reported in a May 2022 article that a new study reveals a majority of homeowners have not ensured their coverage is keeping pace with rising inflation and increased building costs.  The study, conducted by the American Property Casualty Insurance Association (APCIA), demonstrates that policyholders could be left underinsured if catastrophe strikes.

Further, The Harris Poll reports that only 30% of insured homeowners have purchased more insurance or increased coverage limits to compensate for rising building costs.  Additionally, less than half (40%) updated their coverage after completing renovations or remodels during the pandemic.  

The recent increase in home market values doesn't directly impact your insurance.  The key factor today is the increased cost of construction and making sure that your Dwelling limit matches what it would cost today to replace your home 100%.  While total losses are rare, not having your home insured fully may impact large common losses like a tree falling on your home.

Now, more than ever, it is important to conduct an annual review to ensure you have enough coverage to repair or rebuild your home should disaster strike. 

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Key coverages to discuss with a trusted advisor:

  • Replacement cost coverage – pays an amount necessary to rebuild the home with construction materials of like kind and quality and replace your personal belongings, without deducting depreciation.
  • Automatic inflation guard – automatically adjusts your coverage amount at each renewal time to help keep up with rising costs; however, during periods of extreme inflation, it remains important to review coverage limits.
  • Building code/ordinance coverage – increases coverage to help comply with any new building code or green energy ordinances.
  • Extended replacement cost coverage – increases coverage available to rebuild your home when labor and material costs skyrocket after a natural disaster.
  • Additional living expense (ALE) coverage – optional higher limits may help cover hotel and food costs if a longer timeframe is needed to rebuild your home.

For the full article published by Insurance Journal:  Most Homeowners Underinsured for Trends in Inflation, Building Costs: APCIA (

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