Coverage terms and premium amounts of homeowner’s insurance policies enacted prior to 2020 were calculated based on what it would cost to rebuild a home and its attached structures at that time. Since the Covid-19 pandemic, construction material costs have risen dramatically, due to an increased demand for materials for home projects, as well as manufacturing shutdowns during quarantine. Insurance companies are now recalculating the cost to rebuild a home, should the need arise. Coverages are increasing to accommodate higher construction costs, resulting in a higher bill for homeowners.
There are several factors that will affect how much a homeowner’s policy premium will increase. The location of your home, when you purchased your original homeowner’s insurance policy, and recent home remodeling projects (both small and large) will all play a role. While no homeowner desires to receive a premium bill that is higher than expected, policy and coverage increases will ensure that your home and its structures are fully covered in the event a rebuild is needed.
Changing homeowner’s insurance carriers will probably not help to decrease a policy premium, as rising construction costs are affecting insurance companies across the board. It is advised that homeowners meet with their insurance agent to ensure that their Coverage A limit, which covers the cost of construction materials in the event of a rebuild, is being calculated correctly by their homeowner’s insurance. It is also recommended that homeowners review recent home improvement projects and structural changes with their agent. While experiencing an increase in an insurance premium is never an ideal situation, homeowners want to ensure that they have adequate coverage if a rebuild is necessary.
The agents at Gill Insurance are happy to meet with our clients to review their current homeowner’s insurance policy, to discuss recent changes to their home or its structures, and to determine if they have sufficient coverage with their insurance carrier.