Are we in for Homeowners Rate Increases?
It cost a lot more to repair damage property in 2016, according to Xactware’s 2016 U.S. Property Report. The company’s XactAnalysis network processed almost 5 million property estimates last year, totaling $51.5 billion, a significant increase from the $39.6 billion handled in 2015.
The increases mirrored the catastrophe activity seen in April and May with hail, flooding, and tornado claims, as well as the damage in August, October, November and December from Hurricane Matthew, windstorms and thunderstorms. Property estimates reached a high of $5.5 billion in December.
The average cost of the property estimates reported to Xactware increased 12% from $9,233 in 2015 to $10,347 in 2016, due in large part to increases in construction costs and the frequency of catastrophes. The figures come from several sources including independent adjusters, specialty providers and contractors. The cost of the average property estimate from independent adjusters dropped by $466, while estimates from contractors increased by an average of $575.
Property estimates for fire claims averaged $45,482, and were the most expensive type of claim filed, followed by hail claims at $11,019. The least expensive claims involved vehicles ($6,067) and vandalism ($5,878).
Reconstruction costs rise
While reconstruction costs also rose in 2016, it was at approximately half of the rate seen in 2015 or 1.81%. Fuel costs frequently affect building prices because they impact petroleum-based products such as carpeting and composite roofing materials. The price of crude oil rose from $31.68 in January 2016 to $45.71 by November 2016. In 2015, the price per barrel of crude oil actually fell approximately $10 per barrel.
Xactware’s Property Report identified 43 catastrophes that impacted the U.S. in 2016. The largest increase in rebuilding costs occurred in Washington, D.C., at 4.42%; followed by Vermont at 3.25%; and Rhode Island at 3.0%. Alabama (.046%), West Virginia (0.57%) and Arkansas (0.59%) saw the smallest increases.
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