The pandemic has affected almost every part of our lives, including our homes. If you have looked at the cost of timber recently, you have no doubt noticed that it has reached new, astonishing heights. In fact, market experts say timber costs have tripled in the past year. According to the National Association of Home Builders, " Timber prices rose more than 300 percent between April 2020 and May 2021, raising the average price of a new single-family home by nearly $ 36,000."
Source  There are a number of reasons for the astronomical price increases, starting in 2018 when a 20% tax was placed on timber imported from Canada. The tariff fell to 9% in 2020, but timber production decreased dramatically at the same time due to pandemic closures. Now with COVID-related restrictions easing, there is huge pent-up demand and low inventory. Construction industry experts say there is no reason to believe that timber prices will fall any time soon.
How high timber prices affect your homeowner's insurance
You do not have to build a new home to be affected by increased construction costs. The cost of repairing the home – either to repair a flooded basement or to rebuild an entire home – has also increased dramatically.
As a homeowner, it is important that your home – the heart of the family – is properly insured. This means that as construction costs increase, your insurance coverage must increase to the same extent to cover repairs should something happen.
Protecting Your Biggest Investment
The good news is that when you have the right insurance coverage, you can rest assured that whatever happens, your home will be taken care of. The first step is to understand exactly what your home insurance policy covers. "Full replacement cost" is the most common policy written. This can be difficult because your policy limits may not be in line with today's rising construction costs.
For example, if your home is declared as a total loss, the insurance can only cover 80% to 60% of the actual renovation cost if it has not been upgraded to take into account the construction costs in 2021. Also, if your insurance includes "co-insurance penalties", you must keep the insured building value within a certain percentage (sometimes up to 90%) of the total compensation value.
It is also important to understand the different values used for your home. The cost of rebuilding your home, for example, differs from the market value of your home. Both of these numbers are usually higher than your home's tax assessment value.
If you have not reviewed your home insurance in the past year, it's time to do so. At Keller-Brown, we will review all aspects of your policy to ensure you have the right coverage. We do not just need to fill out an online questionnaire – we review the policy with you. After all, no one knows your home better than you do. And some improvements – like a new roof or a home protection system – can save money on your insurance premium. Click here to schedule an appointment with a Keller-Brown homeowners insurance specialist.
The right insurance for new construction
Maybe you will join our neighbors in Pennsylvania and Maryland who will be allowed to build a new home this year. While it is tempting to just buy the first policy you see on the internet to get through your solution and closure, it can be a costly mistake. Schedule an appointment with a Keller-Brown homeowners insurance specialist today and give yourself a peace of mind that comes with knowing that your new home is properly insured. home renovations can affect your insurance? Learn more about it – including what home improvements will lower your premium – in this article.
Get a free homeowner's insurance estimate
For any insurance questions regarding your home in Pennsylvania or Maryland, call or contact Keller-Brown Insurance Services today. Our insurance specialists will work with you to find the right coverage at the right price. We are proud to be an independent insurance company that works with top-ranked insurance companies.