Personal Insurance

Have you reviewed your insurance with your agent recently? If not, it’s time!

couple in their home meeting with insurance agent

Insurance premiums continue to rise due to several factors. The three main causes are:

  • Increasing property replacement costs
  • Skilled labor shortages
  • Catastrophic losses

If you already own a home or business property, you may not think these insurance cost increases will affect you. However, they have a direct impact on the amount of insurance you should have on your home or business.

If your home or business property were to be destroyed by fire or another covered loss, you need to have the right amount of insurance to cover the cost to rebuild (the “replacement cost”). This amount is different than market value (the amount you could sell your home for). It is the cost to rebuild at today’s prices and includes things such as demolition, debris removal, and code changes. Often the cost to repair or rebuild is more expensive when large wildfire, hail, or tornado claims happen because contractors tend to charge more and are often booked out for months, even years.

In this article, we discuss the factors that are increasing insurance premiums and what you can do to make sure you aren’t paying too much, while ensuring you have the coverage you need if a disaster strikes.

Why Insurance Premiums are Increasing

Property Replacement Costs

The cost of construction has increased 28% over the last five years. Derrick Linn, co-owner of Leavitt Heartland Insurance, explains that just like phone booths and Walkman’s, $100 sq. ft. replacement cost values have been long gone since the 90’s. When speaking to builders, he’s found that due to both labor and material shortages, new home builds are averaging $250 to $400 plus per sq. ft. Most commercial building is even higher.

Skilled Labor Shortage

Construction project delays and material shortages brought on by the pandemic, coupled with supply chain breakdowns and the ongoing shortage of skilled workers, are increasing the amount of time and money it takes to rebuild.

Catastrophic Losses

Unprecedented frequency and severity continue to drive catastrophic losses caused by severe convective storms, tornados, hail, floods, wildfires, hurricanes, and winter storms.

Over the past five years, there have been 86 events with losses exceeding $1 billion each in the United States.

In 2022 (as of July 11), there have been 9 weather/climate disaster events with losses exceeding $1 billion each to affect the United States.

The map below denotes the approximate location for each of the 9 separate billion-dollar weather and climate disasters that impacted the United States from January to June of 2022.

weather disasters and insurance
NOAA National Centers for Environmental Information (NCEI) U.S. Billion-Dollar Weather and Climate Disasters (2022)., DOI: 10.25921/stkw-7w73

Ensuring You Have the Right Insurance

Determine the Replacement Cost of Your Home

Your insurance agent can help you calculate the replacement cost of your home with an online tool called a replacement cost estimator. The estimation is based on a variety of factors, including your home’s age, location, size, building materials, and craftsmanship upgrades as well as the cost of local labor.

It’s important to keep in mind these estimates are suggesting a minimum amount of insurance coverage. Your home can be insured for more when it makes sense (for example – custom homes may need a higher amount of coverage than what is suggested by the replacement cost estimator). Most companies are willing to insure for more than that limit (within reason) as long as the agent can support why they’ve increased it.

Another option is to hire an independent appraiser. This is known to be the most accurate way to find the replacement cost of your home. An appraiser will do an in-person inspection of your home. They will also be up to date on building codes in your area, and they can give you an estimate that includes the cost to rebuild up to code.

Remember Not All Insurance Policies Are Alike

When purchasing insurance, it is important to understand that not all policies are like comparing “apples to apples.” Sometimes less is just that, less. Less premium and much less coverage.

As your insurance premiums increase, be cautious about changing carriers or reducing your coverage to save money. Trust your insurance agent to help guide you to the best ways to reduce your premium without giving up the coverage you need the most. They’ll help you decide if changing carriers or adjusting your policy is the best option. There are things you could be giving up when changing to a new carrier, such as multi-policy discounts, loss forgiveness, diminishing or one loss deductibles, newer roof credits, and more.

Meet with Your Agent for an Insurance Review

When shopping for your child’s car seat or buying new tires for the family car, would you shop for the very cheapest option you can get? Probably not, because you want to keep your family safe and you value the peace of mind you’ll have knowing you bought quality protection where it matters most.

The same holds true with your insurance, but it’s hard to know all the elements that should be considered when purchasing insurance, renewing your policies, or changing carriers. That is why you should review your insurance at least once a year with your agent. They’ll ask the right questions to guide you to the coverage that is right for you. They’ll help you understand your policy, assess the rapidly changing replacement cost of your home or business, and help ensure you purchase the right amount of insurance while getting the discounts you deserve.

Keeping your insurance in line with your current needs is an important part of owning a home or business property. Reach out to your Leavitt Group insurance advisor today to schedule an insurance review.


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Lindsey Kirby is the personal lines practice leader for Leavitt Group. She was raised in Bridger, Montana, and graduated from Montana State University of Bozeman in 2005. Lindsey started with Leavitt Great West Insurance in March 2014 as a personal lines account manager and transitioned to a PL team lead at the end of 2018. She was promoted to personal lines practice leader for Leavitt Group Enterprises in November 2021. Lindsey earned the Certified Insurance Service Representative (CISR) designation in 2006 and completed the Certified Insurance Counselor (CIC) designation in 2015.