In our lifetime, inflation cycles happen due to changes in foreign policy, administration shifts, and other supply factors. We’re not sure what you have experienced personally, but even weekly grocery store trips seem to be affected by the lack of bacon one week and cream cheese the next. (And we all remember the whole toilet paper rationing thing in 2020). The COVID-19 epidemic has undoubtedly contributed to these issues and affected pricing of all products and, if you haven’t noticed, insurance rates have increased as well. Many causes have contributed to the growth in prices of property insurance such as construction materials, goods, services, as well as a large increases in production costs.
What does a recession entail for the safety of your family and your home? Here are some of the essential points to understand about inflation, the housing market, and the impact on you homeowners insurance policy:
How Inflation Affects the Cost of Claims:
In general, your insurance rate is determined by taking thousands of different criteria into account. It will be determined differently by every company based on the property’s location, your insurance score, and the various features of construction and updates. The level of coverages you select for your property also influences the cost of your Florida Home Insurance. Other factors that are pertinent to quoting include the home’s age and whether the roof’s condition is in accordance with most-recent building codes. (Specifically Florida’s hurricane resistant building standard). Don’t worry if you are unsure, this can easily be determined by ordering a Wind Mitigation Inspection, which we strongly recommend for all homes built before 2002, to take advantage of hundreds, maybe even thousands of savings every year on your insurance premium.
Many components of homeowners and landlord insurance have changed in response to the rising cost of inflation paired with our nation’s response to Covid-19. According to the National Association of Home Builders, the average price of a single-family home has risen by approximately 30,000 dollars since the pandemic’s early stages in April 2020. In Florida, we are seeing rates well-above the national averages.
“Insurance companies have to treat your property as if it is going to be a total loss. When it costs more to re-build it, it costs more to insure it.”
SEE ATTACHED
Here are a some specific factors that are driving up the cost of Florida Property Insurance:
- Construction supply constraints across the globe
- Lack of workforce
- Price increases for products and services
- Cost of production increases
- Demand
Let’s Talk About the Numbers
Many new and unexpected changes have occurred within our culture and economy since the outbreak of the pandemic. While everyone is hopeful to come out strong, we have had to adapt to different ways of going about our lives. With this new change comes even more price increases on practically every item we can think of. The exaggerated production rates, combined with the scarcity of resources, have a direct impact on homeowners and their insurance prices not only in Florida, but everywhere in the United States.
The Effects of Inflation
- 90% of new builds reported shortages of appliances and 87% reported a shortage of windows and doors.
- 20% increase in building, labor, and materials.
- 47% price escalation in sales construction contracts.
- 18% current average inflation gap in labor and construction materials.
- Increases in iron and steel, as well as lumber and asphalt
We know that claim trends also contribute rising insurance rates. Claim filings have not slowed and now we have elevated costs to respond to claims due to these supply factors.
How much of an increase will I see with my home insurance?
It’s impossible to determine an exact number or percentage of what kind of increase you can expect. If your increase is so excessive that it drives you to re-shop your policy, be sure to contact our Licensed Agents for ways to find premium relief without sacrificing coverage. From 2020 to present, the construction industry has been affected in many different aspects. This, is in addition to a global supply chain shortage, impacts consumers directly. With many of the factors above, this plays a role in why you may see increased home insurance premiums in 2022 and beyond.
What Harris Insurance is doing for you:
We have been your go-to agency for homeowners insurance at fair rates since 1965. We shop and compare every possible company to provide you the best quote from the start. We also work with clients at renewal time to ensure we are continually offering the best rates.
Always remember that we are here to help answer any questions you may have when it comes to all things insurance, current inflation, and everything else! Drop us a line at service@harrisinsurance.com or call us at 850.244.2111 to speak to your Agent today.
LEGAL DISCLAIMER
Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
