Your article highlights issues of supply and demand which “may” exist following a catastrophic loss but you must admit the vast majority of insured losses are sole location events. Current home insurance policy terms base required amounts of insurance on the cost to build a structure “immediately before a loss”, not a worst case scenario estimate of what it “might” cost to rebuild a structure “after it has been damaged”. I would argue, insurers basing required amounts of insurance on RCT/type “reconstruction cost” valuations are requiring policyholders to purchase inflated amounts of insurance and pay inflated annual premiums.
Most insurers offer, or should offer, endorsements at a nominal charge which increase the policy’s amount of insurance to cover potential fluctuations in labor and material costs resulting from supply and demand spikes following a catastrophic event.
Requiring, not suggesting or recommending, policyholders maintain inflated “reconstruction cost” limits when the policy terms require only “replacement cost new” limits seems most unfair to me. If insurers are going to require “reconstruction cost” limits, shouldn’t they be required to amend their policy terms and rate filings?
Your article highlights issues of supply and demand which “may” exist following a catastrophic loss but you must admit the vast majority of insured losses are sole location events. Current home insurance policy terms base required amounts of insurance on the cost to build a structure “immediately before a loss”, not a worst case scenario estimate of what it “might” cost to rebuild a structure “after it has been damaged”. I would argue, insurers basing required amounts of insurance on RCT/type “reconstruction cost” valuations are requiring policyholders to purchase inflated amounts of insurance and pay inflated annual premiums.
Most insurers offer, or should offer, endorsements at a nominal charge which increase the policy’s amount of insurance to cover potential fluctuations in labor and material costs resulting from supply and demand spikes following a catastrophic event.
Requiring, not suggesting or recommending, policyholders maintain inflated “reconstruction cost” limits when the policy terms require only “replacement cost new” limits seems most unfair to me. If insurers are going to require “reconstruction cost” limits, shouldn’t they be required to amend their policy terms and rate filings?
Nobody reads or………nobody cares.