Is Rising Supply Costs Affecting Your Home Insurance Policy?

Long story short: Yes. If your home gets hit by a natural disaster, like a hurricane or tornado or fire, your insurance company should be able to provide "replacement coverage." However, with the continual increase in building supply costs, like glass or wood, your policy may not cover the amount of money you would need to get the job done. 

View this cause and effect formula:

CAUSE --- COVID-19 created shortages in building materals 
EFFECT --- The law of supply and demand dictates that the price of building materials increase to support the lack of supply. Rise in building costs means a rise in construction. project costs.
PROBLEM --- Even though consturction project costs increased, all of the insurance policies remained the same. They were not increased to match the supply and demand crisis. 

Typically we are seeing the issue with new construction homes taking longer than usual to get built and for much higher prices. “We’ve seen some pricing increases anywhere from 3 to 5%, maybe even to 6% with some insurance carriers,” Felsen said. “I’ve never seen rebuilding costs escalate this much, if it used to cost $300,000 to rebuild a house, now it might cost $350,000.”

With Florida in the middle of rainy season, and dodging tropical storms and hurricanes left and right, now is the time to review your insurance policy.

"Homeowners should go over their policies and discuss any changes with their insurance agent. When renewing an insurance policy, it is important to reassess each time. Don’t just take the automatic renewal. Talk to your agent and review your policies,” Felsen said.