Emerging trends in home insurance coverage
December 5, 2014
As the year comes to an end, many home sellers, buyers and home insurance companies are turning their sights to 2015. It is expected that by the end of next year, millennials will be the leading force in the home-purchasing market. And for most of them, it will be the first time they buy a house.
Increased flooding is leading to more home insurance coverage.
"Roughly 42 percent of millennials say they want to buy a home in the next one to five years, compared to just 31 percent of Generation X, and by the end of 2015 millennials will become the largest homebuying age group,” Dr. Stan Humphries, chief economist for Zillow, said in a press release.
But this shift in home purchasing is also timing up with some home insurance changes that are now commonly taking place. As most of the millennials purchasing homes will be doing so for the first time, they will also be exploring home insurance policies for the first time. It is important to compare quotes and be aware of new trends in the industry.
Here are a couple popular changes emerging in the home insurance marketplace:
- Cash value for roofing: An increasingly common trend for insurance companies is to reimburse a roof for its cash value as opposed to its replacement cost. These are significantly different though many first-time homeowners might not be fully aware of just how different they can be. For instance, the cash value of the roof is the original cost of the roof itself—not including installment costs or depreciation with age. On the other hand, the replacement cost is what it costs to replace the roof.
- Flood insurance expanding: Many millennials might not be aware that flood insurance is not part of standard home insurance policies. However, as the climate changes, landlocked states are experiencing damage caused by flooding, and for many of these homeowners, it is the first time. Because of this, there has been an increase in flood coverage, which is purchased through the National Flood Insurance Program. These increases have led to recent legislation, which addressed new rates and expanded risk areas, creating more options for those wishing to cover their homes in the case of a flood.
Acquiring home insurance should be done with time and consideration. Sometimes, it is easy to simply secure a basic plan based on cost alone and not take long-term effects into account. But covering a home is to prepare for emergency situations. Assuming there won't be any is not the way to go.