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LOUISIANAAGENT
By: Stuart Powell Several months ago, I had a new roof put on my house (by the way, I paid for the new roof and did not make an insurance claim) and was shocked by the cost estimates. The roofer explained that the cost of shingles had increased substantially over the last year due to production interruptions caused by the Covid response.
Homeowners'
Just this week I was informed that the price of lumber has also tripled over the past year. Hopefully, this is a short-term situation, but it does raise a concern regarding the cost of construction compared to the property limits provided by a given f insurance policy. Granted, not all property losses are total losses, however significant increases in construction material could affect a large property loss, possibly exhausting the available amounts of coverage.
Inflation Guard (HO 04 46) The inflation guard endorsement increases the initial policy limit on a pro rata basis throughout the policy period. Unfortunately, choosing an inflation percentage is a lagging indicator and is a guesstimate that may not predict the increases from an event like a pandemic interrupting the material supply chain. Depending on the inflation guard percentage chosen, the additional premium for inflation guard protection can range from a 2 percent increase to about 6 percent.
What coverage options are available to mitigate a situation of rapidly increasing construction costs?
Within the homeowners' program, two options are available: Attach the Inflation Guard Endorsement; and/or Attach one of the two “Additional Limits" endorsements.
