The American Property Casualty Insurance Association (APCIA) checked in with 1,000 homeowners and asked them about their homeowners insurance policy. Most haven’t made sure their policy is up to date and keeping up with the cost of building supplies.
A new wrinkle is growing inflation.
Those same homeowners have not take that into account either. The poll — conducted by The Harris Poll — found that just 30% of those surveyed have picked up more insurance. Or at the very least, have upped coverage limits to account for inflation.
Karen Collins of the APCIA said the Harris survey also found that just 40% of those doing remodeling, or even complete renovations, increased their homeowners insurance.
“It is critical that homeowners make sure they have the right amount and right types of coverage during this period of significant inflation, but unfortunately our survey shows that many individuals may not be properly prepared,” she said. “Our survey found that about two thirds of homeowners may be without key additional coverages, such as annual inflation adjustment, extended replacement cost, and building code/ordinance coverage, that can better protect them in these challenging market conditions.”
Collins points out that from December of 2019 to December of 2021, the cost of construction materials jumped 44%.
“It is important to conduct an annual review of your insurance policy with your insurer or agent to help ensure you have enough coverage to repair or rebuild your home should disaster strike, but only 30 percent of insured homeowners updated their insurance policy less than a year ago,” Collins pointed out. “Homeowners should be aware that rebuilding costs are increasing, and they should take steps now to update their coverage and mitigate against potential damage.”
Sadly, 64% of the 1,000 homeowners are not sure — or don’t believe — their homeowners limits are based on the real estate market value rather than the cost to rebuild
When it comes to inflation, 63% say they have not added an annual adjustment for inflation. Or aren’t sure if one was added. Another 69% have not added — or aren’t sure if they’ve added — ordinance coverage for new energy or building code changes.
Even worse, only 20% of the 1,000 homeowners say they have made, or updated, an inventory of their possessions. Adding to that statistic is the 25% who’ve said they’ve never done one.
“As climate change is causing more severe and frequent natural catastrophes, this should be a wake-up call to homeowners to pick up the phone and call their insurer or agent to discuss their insurance policy and make sure they have the coverages they need,” Collins advised. “Too often people overestimate their preparedness for natural disasters and other emergencies, and this can lead to gaps in preparedness and insurance coverage.”
Source link: Insurance Journal — https://bit.ly/3KVd0kY
Homeownership & Inflation & Building Costs
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