Higher Building Material Costs

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Higher Building Material Costs, Inflation to Impact 2022 Homeowners Insurance Premiums in Florida

Think of insurance rates as units of measure. The insurance rate represents how much must be charged for a unit of risk to cover potential losses, administration costs and other expenses

A premium, on the other hand, is the amount a policyholder must pay to insure their home. The premium is based on the insurance rate but also considers other factors including replacement costs, which are impacted by inflation, building material costs and real estate prices. Unlike insurance rates, annual premium increases are not capped by law.

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Every year, property insurers, adjust replacement costs to reflect inflation. For 2022, inflation adjustments for renewal policies are much higher than previous years due largely to higher building material costs brought on by COVID-19-related shutdowns.

These inflation adjustments may increase by 10-25% for Personal Lines policy renewals effective on or after January 1, 2022. Because Insurance companies have a responsibility to its policyholders with replacement cost coverage to make sure they have the resources to rebuild after a total covered loss, most Florida homeowners insurance policyholders will see premiums rise by more than 11% in 2022.

Agents can complete a new cost estimate for Personal Lines policies or provide an alternate valuation document. Policyholders should work with their agents to determine their best coverage options and to make sure they have adequate coverage to protect what may be their most valuable financial asset – their home.


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