Home Insurance Update
At CRG we want to make sure our clients not only have an understanding of their current insurance policies but also have a general understanding of the insurance market as a whole. This has been especially tough in recent years with countless factors impacting rates, eligibility, and coverage offered. We appreciate your patience and understanding as we all navigate this volatility in the insurance industry. Given a few current events that have occurred, now is a great time to provide another update to the home insurance market.
Recently, the most common question that clients ask is what their rates will look like on their insurance renewal. While the average home insurance rates are still increasing, the overall outlook on the home insurance side is starting to look a bit more promising. Carriers have each installed a number of changes and new requirements in order to mitigate future large losses.
Insurance Carrier Changes
Here is a quick reminder of potential changes insurance carriers have introduced in addition to rate changes:
– Increased home deductibles
– Separate wind/hail deductible
– Insuring older roofs based on actual cash value
– Restriction on roof age, roof type, other home characteristics
– Requirement of packaged policies (auto & home/renters) for all new clients
Inflation Impact
You may also notice that your home is insured for a significantly larger amount compared to a few years ago. The coverage on your home has increased to keep up with recent inflation trends. In most cases, a home is insured for replacement cost and in order to insure it properly, the coverage amount will need to keep pace with inflation each year. With the inflation trends of the recent past, home coverage amounts have had to increase by larger percentages in order to provide the proper coverage.
California Wildfires
The wildfires in California are a recent event that may further impact the outlook of home insurance. You may not think an event that is so far away from your home can impact you, but the trickle-down effect will have a potential future impact. The urgent need for materials and labor to rebuild in the areas affected by the wildfires will impact the availability of materials and in turn impact material costs. Other recent events such as the hurricanes that have affected the Southeast US could have the same potential future impact. As mentioned above, in order to properly insure your home for its full replacement cost any sort of significant material pricing change is accounted for upon a policy’s renewal.
With coverage for your home increasing, it is important to note that not all of the coverages on your policy are automatically included in this coverage increase. Endorsements or added coverage such as Water Backup/Sump Pump Overflow, Service Line coverage, Loss Assessment coverage, and many more optional endorsements are generally added at a specific coverage amount. These remain the same each year unless requested to be increased/decreased.
For example, it could be worth reviewing the amount of coverage you have for Water Backup/Sump Pump Overflow if you have a finished basement. With material and labor costs increasing, the coverage amount you have on your policy now may not cover as much as it did a few years ago. Remember that these added coverages can be added, increased, or decreased upon request.
If this topic has generated any questions or concerns about your policy please reach out to your agent. They’re happy to review and make any changes to your policy that better fit your needs. They can provide their expertise and recommendations when it comes to your concerns. Your insurance needs can change annually, and having a trusted CRG agent to guide you in making the best decisions is an extremely valuable resource through these tough times.
