Inflation is upon us and nothing seems to have escaped the higher costs that we have to pay as consumers. Here’s how inflation affects your property insurance:
Guaranteed Replacement Cost coverage (GRC).
The vast majority of home insurance policies include GRC, which means that, regardless of the amount of insurance shown on your policy, your insurer will cover you for the actual cost to rebuild your home in the event of an insured loss.
What to keep in mind: GRC coverage requires you to report any additions or alterations in excess of $10,000. Failure to do so voids the GRC coverage.
For rental properties and seasonal residences, it’s a different story. Replacement cost coverage may be included in your policy, but only up to the amount of insurance shown. GRC is rarely offered by an insurer for these types of properties. This is a problem because your limit of coverage has not kept up with the drastic increase in the cost of construction that we’ve experienced in the last 24 months.
What to keep in mind: The cost of construction has increased by approximately 30% in the Algoma region. Insurance policy coverage limits are currently being increased with a 5-7% inflation factor.
Property owners of rental and seasonal dwellings could be faced with a considerable shortfall in coverage in the event of an insured loss. It’s very important to have a conversation with your broker to review your property policy and ensure you have adequate coverage.
If you’d like to discuss your policy with your broker, contact us!