How inflation could make your home insurance less effective - WHO TV 13 Des Moines News & Weather

Des Moines, Iowa — Some insurance industry representatives are putting out the call to let homeowners know their insurance policy may be inadequate to replace their homes should there be a fire or tornado loss.

“New numbers came out from the Case-Shiller Housing Index shows the cost of home prices throughout the country in the top 20 metro areas,” said Kevin Croft, of the Kelley Center for Insurance Innovation, at Drake University. “The cost of homes has gone up 19.2% year-over-year as of January, which is actually an acceleration from an 18.9% rate back in December. So the cost of rebuilding your home is going up either rebuilding or buying a new home.”

The most important thing is to have an insurance professional review what you have, and maybe offer a solution.

“You can get one thing called an inflation guard rider which will increase the stated coverage in your policy as inflation goes up,” said Croft. “The second one is a guaranteed replacement coverage so even if the cost of replacing your damaged home and hauling away old debris exceeds the stated amount by buying the guarantee, you will be fully covered.

In general someone seeking insurance on a house or car is advised to consider a high deductible.

“A good idea with your polices they have a high deductible, and then buy as much coverage as you’re able to afford,” said Croft. “That deductible will mean the first thousand or two thousand will be in out-of-pocket expense, but then you buy a lot more coverage because the insurance policy isn’t going to be nickel and dimed with small claims, but they’re there to provide the coverage for a catastrophic claim such as a destruction of a home.”

In all Croft said it is always good to examine the risk you have in your life.

“We really want to think of is a living breathing and a personal risk management plan that you’re incorporating all the things that can happen to us in life or the be a destruction of your home it could be loss of employment it could be a disability and certainly the loss of life-through life insurance,” said Croft.

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