How Rising Lumber Costs Affect Your Home Insurance
Rising Costs of Lumber
Softwood lumber prices rose by an astounding 118.9% in Canada between March 31, 2020, and March 31, 2021. This year over year increase is the largest reported by StatsCan.
How Does This Affect You?
As a homeowner, it is vital that your insurance policy accurately reflects the rebuilding value of your home. With the cost of lumber rising, the cost to rebuild or replace your property rises as well. It is important to know that rebuilding costs are not the only expense that will fall under the property value listed on your policy. Debris removal expense may be included under this limit of insurance. Debris removal is the cost to safely dispose of the rubble left over after a claim.
Many policies also include a coinsurance clause. This clause requires policyholders to insure their home to at least a specific percentage of the total replacement cost value. If your property is not insured to the correct amount then your payout, in the event of a claim, will be penalized. Every policy is different, every insurance company is different, and while some policies may have an 80% co-insurance clause, others may have 90% or even 100%!
Often people won’t notice the insured value on their policy is inadequate until a claim has occurred and then it’s too late.
What Should You Do To Protect Your Property?
Review your limits! Take a look at the building values listed on your policy and connect with your advisor to discuss any changes that might need to be made. Make your advisor aware of any upgrades or renovations that you’ve done to your home to ensure that all details are taken into account when determining the rebuilding value. Often increasing the insured value of your home will come with an increased premium, but a few extra dollars on your annual policy could be the difference between your claim being covered adequately or not.
Remember, you don’t have to wait for your policy renewal to review the details of your insurance. Our advisors are here to answer your questions, address your concerns, and make sure that you are properly protecting what matters most to you.