FLORIDA—According to a new survey form the American Property Casualty Insurance Association, the vast majority of homeowners have not foreseen the ways inflation is having an impact in their insurance coverage. It begins with much higher costs for building. The survey also reveals that only 30 percent have purchased more insurance or increased coverage limits to compensate those rising costs.
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.
In 2020 and 2021, insurance companies in the United States paid out $176 billion for natural catastrophe claims alone, the highest total for a two-year period for natural catastrophe claims.
Inflation, recent supply chain issues, and increased demand for skilled labor and construction materials following unprecedented natural disasters in the last two years have contributed recently to a significant increase in the costs to rebuild homes and businesses.
The survey also uncovered a significant knowledge gap about whether insurance covers the cost to rebuild or the market value of the home.
June is just around the corner, with it is the Atlantic Hurricane Season which directly affects Florida. As we know, climate changes are causing more severe and frequent natural catastrophes. This also represents a higher risk for insurers. Now more than ever it is of utmost importance to have a clear conversation with your trusted agent and make sure you make the necessary adjustments to your current coverage to prevent gaps in preparedness and insurance protection.
As a homeowner, some key coverage features you must address with your agent include:
- Replacement cost coverage – pays an amount necessary to rebuild the home with construction materials of like kind and quality and replace your personal belongings, without deducting depreciation.
- Automatic inflation guard – automatically adjusts your coverage amount at each renewal time to help keep up with rising costs; however, during periods of extreme inflation, it remains important to review coverage limits.
- Building code/ordinance coverage – increases coverage to help comply with any new building code or green energy ordinances.
- Extended replacement cost coverage – increases coverage available to rebuild your home when labor and material costs dramatically increase after a natural disaster.
- Additional living expense coverage – also known as ALE, these are optional higher limits to help cover hotel and food costs if a longer timeframe is needed to rebuild your home.
Every year in Florida, homes are damaged by storms, fires, and other unpredictable disasters. To protect your greatest asset, you need homeowners insurance to cover damages or loss of your home, including if it is rendered uninhabitable. Always remember the importance of keeping an inventory with photos and videos of your home’s contents and have it readily available in the event you need to report a loss if a disaster strikes.
Let your local insurance specialists at Orlando Insurance Centerhelp you save in the purchase of insurance bundles. Give us a call today at (407) 680-1214— for an initial consultation and quotes from among 20 different insurance carriers who support us!
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