Your insurance coverage limits are the maximum amount the insurance company will pay you after a loss.  As you’ve probably noticed, the cost of buying a home has skyrocketed – and experts say that the market is not going to slow down anytime soon.  With the home prices increasing at such a rapid pace, should you increase the policy limits of your homeowner’s insurance to keep up with these price increases?

Home prices have increased 18.6 percent since June of 2020, and August 2021 marks the third consecutive month of record growth according to the Home Price Index.  In addition to overall property values, the cost of home maintenance, including building materials and labor, has gone through the proverbial “roof” as well.  A recent National Association of Home Builder’s Survey reflected that building material costs have spiked 26.1 percent on average over the past 12 months.

Given the increased cost of building materials and construction, you may want to contact your insurance company and increase the policy limits of your homeowner’s insurance.  Although the coverage limits of your policy may have been accurate as of the issuance of the policy, these limits may not be sufficient to rebuild your property in the current price environment.  Although some policies provide a special “inflation guard” endorsement, even such may not be sufficient to cover today’s construction prices.

Before deciding to raise your coverage limits, speak to your local agent about your current policy limits and exactly what would be covered after a loss.  Although it will not be the most exciting conversation you have that day, it will help make sure you have the appropriate coverage after a catastrophic loss.