What You Need To Know
In previous blogs we have addressed the different ways of determining a home’s value – check out this blog for a full explanation. As a quick recap:
Market Value is how much your home is worth
Replacement cost value is how much it will cost to rebuild your home based on today’s prices.
Actual Cash value is similar to Market Value, but can be quite a big difference. The cost of replacing your home minus the depreciation of the materials/the structure itself.
Supply chain bottlenecks, extreme weather events, worker/labor shortages and the rising costs of materials all play a part in the increasing costs.
You may have had an increase in your homeowners insurance recently. There are several factors that have led to this being a more common situation.
It can all be summed up like this. Supply chain bottlenecks, extreme weather events, worker/labor shortages and the rising costs of materials all play a part in the increasing costs.
Groceries and gas are the only costs that are increasing. The cost of lumber is up nearly 22%, which is DOWN compared to early-to-mid-2021. But that’s not all – bricks, siding, windows, doors, roof shingles, and even concrete prices seem to have all gone up.
What’s more, there are labor shortages which have led to construction jobs being backed up. It’s an awful mix of factors that have impacted all of us.
All that to say, the replacement cost value of a house has increased. The cost of materials and labor required to replace a home from the ground up is more than it was a year ago.
Beyond those factors are the same realities that insurance companies have always had to consider – the trends in frequency and severity of natural disasters on a global scale.
Whether we like it or not, a wildfires in Australia, tornadoes in Europe, flooding in Asia, drought in Africa and earthquakes in South America all have an impact on the insurance marketplace. Even more so are the domestic and regional catastrophes, like the freezing weather in Texas in 2021, wildfires across the Southwest US, hurricanes on the East Coast, and of course, hail storms here in Oklahoma.
Insurance is a global system and we are all in the same boat.
There are possibilities out there, though. Some insurance companies react sooner than others. Some increase their rates but offer stronger discounts. So while your current company may be increasing their rate, another company may be looking for a customer just like you.