While market value is the amount your home is worth on the housing market, your home insurance coverage limit is based on the estimated cost to rebuild your home: the cost to repair, rebuild or replace what you had before, using materials of similar type and quality.  

Factors affecting rising replacement costs:  

• Supply chain disruptions of home materials  
• Rising material costs  
• Labor supply and demand  
• Local Construction Costs  

NATURAL DISASTERS

For four of the last six years, carriers continued to experience net underwriting losses, retreat from the catastrophic property market, increase underwriting scrutiny, and shift risk. The monetary cost of natural disasters has an immense impact on the U.S. economy, the primary insurance market, and the homeowners in affected regions. From 2010 to 2020, hurricanes killed an average of 332 people per year and did an average of $47 billion in damage, while wildfires killed an average of 23 people per year and did an average of $7 billion worth of damage per year. In 2022, Hurricane Ian alone, caused an estimated $53B – $74B in insured losses and is poised to deal a far-reaching blow to a shaky property insurance market already facing multiple pressures.    

Over the past 50 years, extreme weather events or climate disaster have seen a 5-fold increase with no end in sight. Carriers typically look to past events when making risk calculations, which is why they are now struggling to keep up with the impact of unpredictable, extreme weather events. They continue to adapt their underwriting strategies and develop climate modeling to keep up with the weather events, which negatively impacts their bottom line. In the current hard market, carriers are tasked with managing their financial stability while ensuring the availability and affordability of coverage for their insureds.