09 Sep Effects of Inflation on Home Replacement Values
According to the latest report from the Bureau of Labor Statistics, the annual inflation rate in May 2022 was 8.6%, its highest level since 1981. The most common causes for inflation are supply chain issues, strong consumer demand, and worker shortages. Not only does inflation affect consumer goods, but it can also have an impact on your home insurance and replacement value.
Within the last year, the cost of lumber and other building materials has skyrocketed, which means that many homeowners may actually be underinsured in the event that they need to rebuild or make repairs to their home after a covered insurance claim. The last thing we want is for our clients to have to dive into their savings to cover the extra costs.
At Anderson, Bagley and Mayo we offer options to guard against inflation. An inflation guard is the automatic annual increase in property values on an insurance policy to keep up with rising costs of construction. ABM is proud to offer an inflation protection endorsement option for all of our clients that can be added to their home insurance policies to make sure they stay protected.
The inflation guard will automatically adjust the amount of coverage you need each year based on an inflation factor. The inflation factor is a standard measurement used to adjust coverage limits based on an expected rate of inflation. This factor changes year to year and it also varies by geographical location.
If your home insurance coverage is not adjusted over time to account for inflation, you could be faced with not having enough coverage to rebuild or make repairs in the event that your home is damaged or destroyed by a loss covered by the policy.
With inflation costs continuing to rise, there’s no better time than now to make sure you have enough home insurance to cover the cost of repairs. Contact us at one of our four convenient Massachusetts locations at (978) 534-2800 (Leominster), (978) 632-1098 (Gardner), (978) 874-2921 (Westminster), (978) 464-5857 (Princeton) to review your policy and discuss an inflation guard.