[news] => how-inflation-and-supply-chain-issues-can-leave-you-underinsured-
  • Home
  • News
  • How Inflation And Supply Chain Issues Can Leave You Underinsured

How Inflation and Supply Chain Issues Can Leave You Underinsured


It’s hard to escape rising costs due to pandemic-related supply chain issues. Whether it’s bacon or baseballs, almost everything seems more expensive and harder to get lately. And that’s true across many sectors — including building materials for new home construction, renovation and repair.


According to the May numbers from the National Association of Home Builders, the price for wood-based building materials alone increased so much over the previous year that it added nearly $36,000 to the cost of an average single-family home. And the Bureau of Labor Statistics’ Producer Price Index for May reported that the cost of copper wiring increased by more than 40% over a year’s time. Home renovation and repair charges are going up too with the price of drywall and PVC plumbing pipes on the rise.


You might think you’re immune to soaring construction costs if you love your house and aren’t planning on moving anytime soon. But what happens if a hailstorm damages your roof, a falling tree takes out your garage or, worst of all, a fire or flood destroys your home or makes it uninhabitable? Does your insurance policy have enough protection to cover repair and replacement costs for your dwelling and property in a supply chain challenged economy?


Actual Cash Value Coverage

Think of this as the amount something is currently worth if you sell it on the open market. It’s the value of an item minus any depreciation — the value it loses over time. A car is a great example of how depreciation can impact value. You’ve probably heard the adage that a car loses half its value as soon as you drive it off the lot — while that may or may not be true today, a car’s value depreciates (or goes down) considerably over time, even if you keep your ride in perfect condition and barely drive it. An actual cash value policy covers the depreciated value of your home or property, not what it may actually cost to repair or replace it.


Replacement Coverage

If the replacement cost for your home or property is more than its actual cash value due to depreciation, you might be underinsured. And this could put you in a precarious position in the event of a major claim. Replacement coverage can make you whole following a significant insured event by allowing you to repair or replace your property or dwelling at today’s prices, using materials and goods of comparable quality. If your home would cost more to repair or replace now than it did when you took out your policy due to its age or current condition, consider securing replacement coverage.


The Long View

Experts say this won’t last forever, but prices don’t appear to be going down in the near future. Supply chain disruptions may continue well into 2022, and that would mean higher prices for building and construction materials for a while yet. Make sure your insurance coverage is sufficient to see you through this unusual time. Call your local We Insure agent today and get ahead of any future challenges you might encounter in covering costly home replacement or repairs by making sure your home and belongings are appropriately insured.


 "The information contained in this page is provided for general informational purposes only and may not be applicable to all situations. WeInsure makes no guarantees of results from the use of this information." 





Related Articles

The Importance of Flood Protection and How Flood Insurance Premiums Are Determined

May 1, 2023

On February 16, 2023, the governor of West Virginia declared a state of emergency due to severe flooding throughout the state. Scenes from after the flood were heart-wrenching as people assessed not just the damage to their property, but also the ove...
Read more
Your Ship Has Come In — Now Find the Right Boat Insurance to Protect It

April 28, 2023

From the time a human first hopped onto a floating log to cross a stream until the present day, we’ve long been attracted to travel on the open water. But just like your car, today’s floating freedom machines come with risks — ones ...
Read more
Save on Homeowners Insurance With a Security System

April 1, 2023

Along with the other expenses and aspects of our recent economy, the cost of homeowners insurance has risen over the past year. And the Insurance Information Institute says rates are likely to increase even further in 2023.   Yet you do have ...
Read more

The information contained in this page is provided for general informational purposes only and may not be applicable to all situations. We Insure makes no guarantees of results from the use of this information.