A major expense of many retirees and pre-retirees has been increasing rapidly, but it isn’t included in the Consumer Price Index and doesn’t affect reported inflation.

You’re probably aware of how auto insurance premiums increased rapidly the last few years. That substantially increased the cost of owning and operating vehicles and contributed to a higher CPI.

While auto insurance is included in the CPI, homeowner’s insurance is not.

Homeowner’s insurance premiums rapidly increased the last few years and increased your personal inflation rate above the reported CPI.

After rising about 20% over 2022 and 2023, homeowner’s insurance is estimated to increase another 6% in 2024. Bloomberg Intelligence estimates that the cost of insuring a home increased about 50% from 2019 to 2023.

Renter’s insurance is included in the CPI but hasn’t increased as much as homeowner’s insurance.

Premiums for homeowner’s insurance increased primarily because of the increased damages from weather events in recent years. The number of costly weather events seems to be higher than anticipated.

In addition, the cost of repairing the damage from those events as well as from routine home catastrophes increased because of general inflation.

Though homeowners in the directly-affected areas bear a large portion of the increases, insurers spread the costs among policyholders around the country.

In some areas of the country, insuring a home has become prohibitively expensive for some homeowners, and a number of insurers have withdrawn from some markets.

Before moving in retirement, be sure to check on the cost and availability of homeowner’s insurance. When reviewing your retirement plan, check that estimates of future costs of insuring the home are reasonable because on recent trends and current circumstances.

Read the full article here

Share.
Exit mobile version