As things change over the years, it’s important that your home insurance evolves as well. Inflation may cause costs to rise. If you don’t amend your home insurance policy, you risk being underinsured in the event of a disaster. In order to help you save money, home insurance companies supply an inflation guard.
Defining an Inflation Guard
To help keep pace with inflation, your home insurance company will automatically adjust your coverage when it’s time for you to renew your policy. Your insurance company projects the amount of coverage you will need in the future to stay fully protected as costs rise. Your dwelling coverage may be altered due to rising construction costs.
If the value of your personal items changes, then you’ll need to amend your content’s coverage. The structures around your home, such as your garage and fence, may also be impacted. Your insurance company may also recommend making changes to your additional living expenses coverage so that you won’t have to spend a lot of money on alternative lodging while your home is repaired.
Generally, insurance companies add an inflation guard to dwelling coverage. The normal inflation adjustments are less than 5% annually. Once the inflation adjustment kicks in, your home insurance premium will rise by 2% or 3%.
Things to Consider
Keep in mind that costs can rise at any time. You will want to have a plan in place if something unexpected happens. If you would like to add some amenities to your home, speak with your insurer first. Your policy should provide full coverage in the event that you need to replace your personal items or if your home needs to be completely repaired.
Insurance companies use an inflation guard as an asset. The goal is to help you stay prepared for emergencies as they arise. If you have any questions about your home insurance policy, Steve Wilk Insurance Agency is here to assist you. We are located at 310 S Main Street, Suite C, Lombard IL 60148.