Owning your own home can be a life-long dream for many people, but with ownership comes the responsibility to take care of it. A challenge many homeowners are dealing with right now is that fixing things in their homes is getting more expensive. And when repair costs increase, home insurance costs also increase in most cases.
Common House Damages:
Homes can get damaged in many ways. The sun, rain, snow, hail, and wind all take a toll on our homes. Be it a roof, siding, deck, window, or entire building, mother nature eventually wears on them to the point of needing repairs or replacement. Ongoing maintenance is required to keep our homes in good condition.
The Rising Costs of Repairs
However, that maintenance isn’t inexpensive. The cost of repairing or replacing damage has seen a notable surge over the past few years.
The construction industry has witnessed a significant surge in the prices of building materials. For instance, in the early 2020s, the cost of lumber reached unprecedented levels, with prices almost tripling from what they were a couple of years prior. Similarly, steel prices surged by more than 30% within the same timeframe. This cost elevation has undeniably affected the affordability of repairing your damaged home.
Reasons Behind the Rising Cost of Materials
Several factors have contributed to the rising costs of building materials. Global supply chain disruptions, primarily triggered by the COVID-19 pandemic, played a pivotal role. As many countries went into lockdown, production at numerous factories slowed down or halted altogether. Ports, too, faced operational challenges, causing delays in the transportation of raw materials. The ramifications of these disruptions cascaded through the supply chain, leading to shortages and, consequently, rising prices. Additionally, demand has been surging post-lockdown as economic recovery and government stimulus packages in various countries fueled construction projects. This juxtaposition of reduced supply and increased demand has been a primary driver for the upswing in material prices.
Rising Labor Costs in Construction
Labor costs in the construction sector have also seen a marked rise in recent times. A primary reason for this is the skilled labor shortage in the industry. Many skilled workers, who either retired or left the field during economic downturns, have not been replaced at the same rate, leading to a demand-supply gap. With fewer trained professionals available, wages naturally trend upwards. Additionally, with the imposition of health and safety measures due to the pandemic, labor efficiency on construction sites sometimes decreased, meaning that projects took longer and required more person-hours. Moreover, the broader economic trends of increasing minimum wages and the need for more comprehensive benefits packages have also increased labor costs.
The Impact on Your Home Insurance
As the costs of home repairs rise, insurance claims related to these repairs also increase. This has a two-fold implication:
- Increased Premiums: Premiums will likely increase if insurance companies face more expensive claims due to pricier repairs.
- Policy Review: Homeowners might need to reassess their policies to ensure they are adequately covered for these rising repair costs.
Why Talk to Your Local Insurance Agent?
- Advice on Insurance: Talk to us about your home and your lifestyle. We can help you determine the most appropriate homeowner’s insurance policy for you.
- Answers to Questions: We’re here to help when you have questions. We can’t fix your home, but we can advise on how certain repairs may impact your policy or what carriers may be looking for when repairs are performed.
- Help with Claims: All claims are inconvenient to say the least. But we can help make the claim process more manageable and less intimidating if you talk with us. We are always surprised to hear clients tell us they didn’t know they could ask for our assistance during the claims process. Please call us with any questions or concerns, even if you’re not sure you want to file a claim.
The fact that it’s more expensive to fix homes is something all homeowners should be aware of. Knowing about these rising costs and how they may affect you is important. By planning and talking to one of our agents here at Imes Insurance Associates, you can make sure your home and your money are safe.