Rising lumber costs may impact your insurance premiums, too

You’re watching the housing market soar and thinking about that equity you’re building. Great! But now think about what it would cost to rebuild your home if it were destroyed — or even partially damaged.

And lumber costs are up. Way up. A local construction company reported to us that typical lumber (2x4, 4x4, 2x8, etc.) went up 20% from March to August last year. Plywood went up 130%, steel 6%, cut stone 7.5% and windows 3.5%. This means the costs to rebuild your home are also way up.

These increased construction costs may change how much coverage you need for your home. More coverage means higher premiums. Your homeowners insurance includes coverage for replacement costs, but chances are, given the market today — it might not be enough.

Now is the time to reach out to your insurance company and make sure you have adequate replacement coverage. Seriously — do it today.

In today’s climate, it’s possible that between when a claim estimate is made by your insurance company and when you receive the money from them to make the repairs, it might not be enough.

Ask yourself:

How much insurance do I need? If you’re unsure, ask your insurance company or check with an insurance agent.

And consider asking about guaranteed or extended replacement cost coverage. It will add to your premium, but in today’s market — it might give you peace of mind. Extended replacement coverage provides an additional 20–25% over your policy limits for the unanticipated costs to replace your home. But you’ll also pay more for it.

Learn more about how homeowner insurance works.

Washington state Insurance Commissioner Mike Kreidler regulates the insurance industry and protects insurance consumers.