By ALLEN MCQUISTON
Jemez Insurance Agency
Serving Los Alamos Since 1963

Most people can expect their homeowners insurance rates to go up this year — along with the cost of materials and supplies — in this economy.  But why?

Extreme Weather Events and Catastrophes

Hurricanes, floods, droughts, wildfires and other severe weather events have become more frequent, destructive and costly. In 2021 alone, the United States sustained 20 weather events with losses exceeding $1 billion each. As weather-related damages go up, so does the cost of insurance overall. Insurers typically adjust rates on a state-by-state basis based on actual and anticipated weather-related losses.

Rising Material Costs

Another key consideration when pricing homeowners coverage is the cost to repair or rebuild a home in the event of a loss. These costs have risen significantly during the pandemic because of:

• A general increase in demand for home renovations.
• A general increase in demand for new construction.
• Supply chain disruptions in the United States and around the world.

These factors combined have led to limited supplies and inflated prices for most building materials.

Consider this sampling of price increases over the last few years:

• Material goods for new residential construction are up 18.6% over the past year.
• Lumber and wood products are up 6.2%.
• Asphalt roofing materials are up 16.3% over last year.

As building costs go up, so does the cost to repair or replace homes damaged by covered losses.

Job Openings in Skilled Labor

New home and renovation projects may be surging, but the construction industry is facing a skilled labor challenge. The sector had 358,000 job openings as of August 2021, more than twice the projected number of annual openings.

Factors Impacting Your Homeowners Rate You May Be Able to Control

Current market conditions that affect your insurance premiums may be out of your control, but there are steps you can take to help keep the cost of your homeowners coverage in check.

Take steps to prevent losses

Be sure to check with your agent about any savings you might qualify for as a result of the preventative measures you take. For example, many insurance companies offers insurance premium discounts for smoke detectors, fire alarms, water sensors, interior sprinkler systems and smart home protection devices.

Review your insurance

Ask your insurance agent to review your current coverage to ensure you’re getting the customized protection you need. Make sure all home improvements are accounted for. Cancel or reduce coverage you no longer need.

Increase your deductible

A higher deductible will likely reduce your premium. Just remember to have enough savings to cover your deductible should you experience a loss.

Bundle your coverage

Many insurance companies offers discounts when you purchase more than one policy with them. Home and auto are commonly bundled for a discount, but discounts may also apply to boat, valuables and personal umbrella protection and other specialty coverages.

Ask your agent about customer retention programs

Current market conditions are challenging. Catastrophic weather events are on the rise. Pandemic-era disruptions, including shortages in building materials and skilled labor, are driving rate changes. But there are factors within your control when it comes to the premiums you pay. It’s smart to take advantage of them.