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The sustained levels of high inflation month after month have affected nearly every aspect of our lives – from buying gas and groceries to other basic goods and services. And now a recent APCIA/Harris Poll survey shows many homeowners are unprepared for the impact inflation has on their home, auto, and business insurance coverage. The survey reveals that a majority of homeowners may find they do not have enough insurance coverage to repair or rebuild their home if a major catastrophe strikes. As we enter peak hurricane season, homeowners need to review and update their homeowners insurance so they are protected. 
  
The current inflationary crisis is something no one has had to deal with since 1980. Inflation hit 9.1% in June 2022 – a 40 year high – but there are other inflationary pressures in the marketplace for which homeowners may not be prepared. Pandemic-related supply chain issues and an increased demand for skilled labor and construction materials following unprecedented natural disasters in the last two years have contributed significantly in the cost to rebuild homes. The cost of residential construction materials is up 19% from a year ago, according to the National Association of Home Builders. These trends are impacting post-disaster recovery efforts across the U.S. – leading to higher costs and longer reconstruction timeframes. Yet only 30% of insured homeowners have purchased more insurance or increased coverage limits to compensate for rising building costs, according to APCIA’s recent survey.  
  
It is critical that homeowners make sure they have the right amount and right types of coverage during this period of significant inflation. However, APCIA’s survey found that about two-thirds of insured homeowners may be without key additional coverages, such as annual inflation adjustment coverage, extended replacement cost coverage, and building code/ordinance coverage, that can better protect them in these challenging market conditions. The cost of these optional coverages varies by company and risk-level, so homeowners should talk to their insurer and shop around for policy and coverage options that fit their needs and budget.  
  
There are other ways homeowners can act to be more financially prepared for a disaster. Homeowners should review their insurance policy annually, but only 36% of insured homeowners reported doing over the last year. A policy review may include confirming any recent upgrades or renovations, such as an upgraded kitchen or new room addition, are reflected in the replacement cost. Our survey found less than half (40%) polled indicated they updated their home insurance to account for recent renovations or remodeling during the pandemic. 
  
It is equally important to create and update a home inventory each year, which can help account for your belongings in the event you need to file a claim. A home inventory is simple to create, yet only 20% of insured homeowners created or updated a home inventory less than a year ago. Twenty-five percent of insured homeowners have never created a home inventory.  
  
With climate change causing more severe and frequent natural disasters, insurers are also urging homeowners to take steps to mitigate their property against potential damage. In 2020 and 2021, U.S. insurers paid out $176 billion for natural catastrophe claims alone, the highest total for a two-year period for natural catastrophe claims.  
  
As insurers, we’re focused on financially empowering our customers with the tools to protect the things that matter most to them. Because that’s what matters most to us. A homeowners insurance policy is there to give you peace of mind that when the unthinkable happens, you have the coverage you need to pick up the pieces and rebuild your home.  
  
Too often people overestimate their preparedness for natural disasters and other emergencies, and this can lead to gaps in preparedness and insurance coverage. Industry surveys show that the majority of insured homeowners are at risk of being underinsured amid high inflation and increased building costs. With the most active part of hurricane season ahead, insurers encourage Texas homeowners to act quickly, before disaster strikes, to review and update their coverage and mitigate against potential damage. 

David A. Sampson is president and chief executive officer of the American Property Casualty Insurance Association. If you have a possible guest column for The Enterprise, email your idea or the column itself to [email protected] If you have something to say, we want to hear from you!