The Impact of High Lumber Costs on Homeowner’s Insurance Costs

According to the National Association of Home Builders (NAHB), the cost of household construction has been rising over the last couple of years. The surge can be attributed to the soaring building material expenses, commonly referred to as the price of lumber. In 2020 alone, the price of lumber went up by 340%, with the trend expected to continue over the next few years.

The COVID-19 pandemic and the historically low-interest rates contributed to the surge in home purchases and renovation projects, which increased the demand for building materials. During the same period, the construction industry has faced supply shortages despite the rising demand. While the rise in Lumber prices is a normal consequence of changes in the economy, it poses coverage issues to homeowners. The high cost of building materials and construction will drive home insurance claim expenses high as the cost of repairing or rebuilding a home after a loss is also high.

With the changes being observed in the cost of construction, many homeowners have realized that their existing coverage and limits no longer offer adequate protection. This also means they are more financially vulnerable in the event of a loss. As homeowners’ insurance carriers review their policies and increase premiums to account for the higher risk homeowners need to respond appropriately:

  1. Review Your Policy
  2. Make sure you fully understand any changes in your homeowners’ insurance policy. Check whether you have replacement cost coverage that can compensate for the cost of rebuilding/replacing your home or an actual cash value coverage that will compensate for the depreciated value of your home. As you review your policy, make sure it provides a correct value for the overall value or replacement cost of your home.


  1. Contact Your Insurance Carrier

Inform your insurance carrier of any home improvements or renovations that you have made or planning to do. You could have remodeled your bathroom or added a new deck. Such improvement will need to be captured and updated in your policy.

  1. Consider Coverage Adjustments

This is a good time to consult with us here at Jeff Johnson Insurance Agency to review your policy and determine whether you need to adjust it. We will check whether the current policy has sufficient coverage for your home in the event of a loss. We may recommend increasing your current limits, changing your policy’s valuation methods, implementing a policy endorsement, or obtaining specialized coverage.

Get Professional Guidance

If you are still stuck on where to start, Jeff Johnson or Dan Mullenbach are ready to walk with you every step of the way. We offer some of the most competitive insurance packages in Des Moines, Waukee, and all central Iowa. Give us a call today at 515-987-6993 and let us help you navigate the increasing Lumber costs. request a quote click here now.