Maybe we’re a little late to the party with Christmas references, but the new year seems about the right time for reflection: what the heck happened to home insurance in the last few years, what’s going on with it right now, and what’s going to happen in the near future? One of the most popular insurance questions around is the age-old, “why are my insurance rates going up?” When it comes to home insurance, that same question has only ever been reiterated for the last few years.
Let’s dig in.
How the pandemic impacted home insurance and premiums.
The pandemic caused a number of unexpected closures in many industries, including the construction sector. The supply chain saw massive disruptions, with chip shortages resulting in a lack of used and new vehicles, tech, but in the world of home insurance the major interruption was in lumber, stone, and metal suppliers. Due to low supply, the cost of these materials increased sharply.
Experts on home insurance in Regina point out that there has also recently been a higher demand for housing in years 2020 through until now, which has contributed even more to the inflated costs for construction materials. Taken all together, this has resulted in much higher costs to build homes, to repair them, restore them, etc. – which means that the replacement cost of many homes has spiked. What does this mean? Essentially, it means that your existing home insurance policy may need reviewal to ensure that your coverage reflects the value of your property. Coverage may need to be upped, which will result in slightly increased premiums. While you may hesitate to pay additional costs, it’s better than being left underinsured. Underinsurance could result in being left with co-insurance penalties if you should need to submit a claim in the future.
Are home insurance rates stabilizing?
In the present, what does home insurance look like? It is projected that as things begin to gradually open back up and we “normalize” in a post-pandemic world, the cost of construction materials and the demand for new housing may stabilize. Does this mean that our rates will, too? Well –
Not exactly. Because while the cost of construction materials and other factors have significantly impacted our premiums over the last few years, the cost of home insurance is projected to continue steadily increasing. This is related to climate change. Climate change is causing a large frequency of freak weather disasters, such as hurricanes, tornadoes, fires, flooding, and more. The higher the frequency of weather disasters, the higher the number of home insurance claims many insurance companies will be receiving. In order to offset the increase in settlement fees, many home insurance companies have been forced to increase their rates.
What will home insurance look like in the future?
It is uncertain what the future will hold for home insurance. As remote working becomes more popular, it is anticipated that insurance companies may offer the chance to “switch” coverage to work-mode, like how delivery drivers can swap between personal and commercial policies for their own vehicles. Future technology may also increase smart home’s abilities to detect issues before they worsen, such as moisture levels, advanced smoke detectors and carbon monoxide detectors, and so on. Usage-based insurance, such as telematics-based insurance for vehicles, may also become more the “norm” for homes. More adjustable coverage may also be a thing of the future, allowing homeowners to alter coverage levels depending on how they use their home, the items they own – and so on. That being said, it is unknown what the future holds for insurance, and it’s safe to say it might be rocky for a little while as things even out around us in a post-pandemic world.
