Inflation and supply chain issues impact insurance policies

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RENO, Nev. (KOLO) — No one likes the idea of ​​a house burning down. Driving by another owner might say, “We’ll just rebuild if that happens.”

In these days of inflation and supply chain issues, the owner might want to double check their policy.

“Two or three years ago, you’d say I’d insure the house for $200 a square foot,” says John Barsanti of Farmers Insurance. “And that would have been an appropriate amount per square foot. These days it might cost three, three fifty, four hundred dollars a square foot to rebuild. And most policies don’t have a rider that says “guaranteed replacement cost,” Barsanti says.

Barsanti says most homeowners will say their home with contents, memories and location cannot be replaced.

That’s not what he’s talking about. The *replacement cost involves what it will take to physically replace the structure. Inflation has led to increased labor and material costs. Then there are supply chain issues where it can take longer to secure materials.

“There are a lot of things owners don’t understand,” Barsanti says. “They know what it costs. But they should understand that I need to have enough money in case something happens.

Barsanti says the same advice applies to those with tenant insurance.

A broken pipe or a small fire can take the person out of a rental, not for a few days, but maybe a few weeks. Does the policy pay for alternative accommodation during this time?

The same could be said of car insurance. Supply chain issues mean an average of three weeks for a repair as 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 policyholders still need to prepare.

Inflation means many can expect an increase in home, auto and rental insurance next year.

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