Inflation driving up replacement cost values
💸 Inflation Is Driving Up Replacement Costs: Is Your Coverage Keeping Up? 🇨🇦
As inflation continues to affect the Canadian economy, one area drawing increased concern is the rising cost of rebuilding or repairing a home after a loss. Many homeowners are now discovering that their insurance may no longer fully cover their home’s replacement value.
📈 What’s Fueling the Surge in Replacement Costs?
• Escalating prices for building materials (lumber, drywall, plumbing fixtures)
• Labour shortages driving up contractor fees
• Supply chain disruptions extending rebuild timelines
• Increased demand for skilled trades following extreme weather events
🏠 Why This Matters
If your home is insured for less than it would cost to rebuild today, you could face a substantial shortfall—even with a comprehensive policy. Underinsurance can lead to unexpected out-of-pocket expenses and lengthy delays in recovery.
🔍 Common Gaps We’re Seeing:
• Replacement cost estimates that haven’t been updated
• Policies based on market value instead of actual rebuild cost
• Absence of guaranteed or extended replacement cost endorsements
✅ What Homeowners Can Do:
• Schedule a replacement cost review with your broker or insurer
• Confirm your policy includes inflation protection
• Ask about guaranteed or extended replacement cost coverage
• Reevaluate your policy annually—especially after renovations or upgrades
🛡️ The cost to rebuild your home today isn’t what it was even two years ago. Make sure your insurance keeps pace with reality—not outdated figures.
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