Homeowners insurance premiums are increasing by rates that exceed inflation. Insurance companies are proposing double-digit rate increases at some state insurance departments. The leading factors include the increased reconstruction cost value of homes, along with increasing values driven by suburbanization. The impact of weather events in these areas of concentrated values would further strain demand for construction materials, equipment, and labor costs.1 Did the pandemic advance new suburbanization?2 The same trends in coastal areas also have national insurance companies reviewing underwriting guidelines and planning to issue new policies on a non-admitted basis rather than admitted.
AssetSure is working with clients to proactively mitigate these increases by focusing the coverage on economic protection against large losses, and monitoring insurance contract changes to covered perils. Our July 2019 blogs on Property Limits and Deductibles reference the importance of liquidity in determining appropriate deductible and Coverage Forms and Service Differences highlight some of the most important coverages for a homeowner. AssetSure encourages an annual discussion with clients to review limits, including owner improvements and betterments, contents and other structures, and evaluation of replacement cost estimates using information from industry databases. As these databases may not account for current inflation estimates, additional consideration should be given when reviewing replacement cost.
As policies typically exclude coverage for the perils of flood and earthquake, at a minimum primary coverage should also be considered. For an interactive tool to see how floods have impacted your county, see Historical Flood Risk and Costs | FEMA.gov.
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