As you all know, Americans were forced to stay home for several months in 2020. For many homeowners that meant home improvement projects. Many Americans are still working from home or unemployed. Increase in job losses also caused decrease production, and that combined with increase demand, mean prices have dramatically increased for building materials.
Iron and steel costs are also rising, up more than 15% in the past year, according to the Associated Home Builders and Contractors. The cost of labor has also increased-the average price of a new single-family home has increased $24,000 since last April.
What does that mean for you? Your building may be underinsured.
Most property insurance policies are written for replacement cost. At the time the policy is issued, your agent calculates the square footage of your building, and uses that along with the year built, what materials are on the outside and add any attached fixtures, add in value of equipment used to service the property to calculate the replacement cost figure.
If your building is insured for replacement cost, at the time of loss the claims adjuster will take all that information (and more) to calculate a current replacement cost figure to be sure you are insured to value by reviewing against your current policy limits and taking into consideration any special endorsements. If you are not insured to value, then depreciation will be applied based on the effective age of the building and you will only get a percentage of what it cost to repair or replace your building.
Prices often fluctuate, but these types of increases are extreme. they may come back down, but for now many people may not have enough insurance to rebuild their home or business. We are happy to review your existing policy to determine if you are protected properly. Feel free to contact us and ask for one of our specialists for home, landlord policies, or a commercial insurance specialist.
Author Lisa M. Flaherty is an expert in the field of business insurance. She is a licensed NYS P&C agent and website publisher. Her expertise is working with business owners eradicating critical coverage gaps in insurance policies, and working with employers to reduce workers compensation costs. Her clients include franchised and non-franchised auto dealers, trucking for hire, contractors, retail, hospitality, wholesale distributors, and manufacturers. Contact: Lisa@tiains.com
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