Inflation and supply chain issues impact insurance policies
RENO, Nev. (KOLO) - No one likes the idea of a home burning down. Driving by another homeowner might say, “We’ll just rebuild if that happens.”
In these days of inflation and supply chain issues that homeowner might want to double check their policy.
“Two or three years ago you would say, I’ll insure the house for $200 a square foot,” says John Barsanti with Farmers Insurance. “And that would have been an appropriate amount per square foot. These days it could be three, three fifty, four hundred dollars a square foot to rebuild. And most policies don’t have an endorsement that says, “guaranteed replacement cost,” Barsanti says.
Barsanti says most homeowners will say, their home with the contents, memories and location cannot be replaced.
That’s not what he is talking about. The *replacement cost involves what it will take to physically replace the structure. Inflation has meant higher labor and material costs. Then there are supply chain issues where it may take longer to secure the materials.
“There are a lot of things homeowner that people don’t understand,” says Barsanti. “They know what it costs. But they should understand I need to have enough money in case something happens.
Barsanti says the same advice applies to those with renters’ insurance.
A broken pipe or small fire may have the person out of a rental, not for a couple of days but perhaps a couple of weeks. Does the policy pay for alternative housing for that amount of time?
The same could be said about car insurance. Supply chain issues have meant an average three weeks for a repair because parts are in short supply. Does the car insurance policy cover a rental car? How long?
Barsanti says he realizes he won’t win a popularity contest by suggesting paying more now for more coverage. But he says policy holders need to brace themselves anyway.
Inflation has meant many can look forward to an increase in homeowner, car and rental insurance next year.
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