With replacement cost being a large factor in premium cost, it is always on a homeowner’s mind when renewal time comes around. With the pandemic and supply chains still playing a role in securing labor and materials, it has been a struggle not only for homeowners, but also for contractors. A combination of trying to find people to work as well as ordering materials that will bring value to the consumer, are up in the air daily. There are over 350,000 job openings in the construction industry as of August 2021 and it continues to be a challenge to find individuals to fill these positions.
Heading into 2022, homeowners would hope to see some type of savings related to their homeowner’s insurance. Truth be told, material goods for new residential construction prices are up 18.6% over the past year. Current weather trends have also been playing a large part in the damage to residential property with 18 weather related disasters accumulating to losses of $1 billion plus in 2021. Not only are claims more prevalent but repairs and replacement parts are getting increasingly costly for the homeowner.
Rate pressures are building in the home insurance market daily. One facet contributing to this increase are the skyrocketing prices of lumber and wood products which are up 6.2% over the last year. The average price of a 2 by 4 tripling over the last two years and one sheet of plywood costing four times what it did pre-pandemic. Furthermore, if a new homeowner wants to update or install a new roof, asphalt roofing material prices are up 16.3% over the last year.
Unfortunately, it’s hard to predict what the future trends will be and whether we will continue to see increased risks and cost. In summary, the industry is dealing with an increase in prices due to increasing labor costs, building material shortages, and extreme weather patterns. It is a good time to make sure the replacement cost to rebuild your home is adequately reflected in the limits you choose on your policy. Your trusted advisors at Ten Eyck Group are here to provide you with valuable background knowledge and information about industry trends and to assist you in making an educated decision regarding your homeowners insurance.