The rising cost (and wait times) of home claims

Like you, we’re seeing that as the economy “resets” to a post-pandemic normal, some areas are recovering faster than others. When it comes to rebuilding homes after disasters, inflation, supply chain delays and labor shortages continue to impact contractors, insurers and homeowners. Whether it’s a windstorm that sends a tree crashing onto the roof or a burst pipe that floods the kitchen, today’s higher prices and delays affect homeowners claims, even for simple items like appliances and windows.

We understand how frustrating that can be, especially for homeowners who feel like they’re living in a construction zone!

Here’s what’s putting pressure on home reconstruction, plus how we can work together to help things go as smoothly as possible if your home needs repair after a loss:

How do market conditions affect the claims process?

PEMCO hasn’t wavered from its promise of 24-hour claim reporting, which helps us quickly line up emergency assistance like drying out a flooded crawlspace, tarping a damaged roof or finding you a place to stay if your home is unlivable after a covered loss. We continue to follow all state and local health protocols during onsite visits and may, instead, use virtual interactions whenever they make sense. (More about the claims process below.)

Although our processes have mostly stayed the same, pandemic fallout and other factors continue to stymie the flow of goods and services needed to repair homes:

• Supply chain shortages. Earlier this fall, Forbes Home warned homeowners that glitches in building-material availability will continue through spring 2023. Shortages are a moving target. Early in the pandemic, for example, the availability of lumber dried up as mills closed to protect workers from infection. Since then, both the supply and price of many wood products has improved, but that’s not always the case for specialty wood needed to match existing floors, trim and cabinets. (Unlike new-home construction, reconstruction often means trying to match replacement items with a home’s current fixtures and finishes.)

  Parts availability continues to vex manufacturers, too, for everything from electronics to textiles. Forbes notes that nearly 30% of products used in U.S. building construction are imported from China, meaning they’re affected by that country’s ongoing COVID lockdowns and any changes in international trade policies.

• Inflation. While the U.S. inflation rate has ticked lower than its June highs, monthly year-over-year increases continue to resemble the early 1980s. The latest inflation figure available (for September) shows 8.2% inflation compared with 2021; however, Forbes Home notes that the costs of construction and remodeling materials are often higher, including appliances, window coverings and living and dining room furniture.
• Labor scarcity. The home building industry was struggling with labor shortages before anyone heard of COVID-19. Since 2018, the United States has seen a shortage of tradespeople skilled in carpentry, HVAC, plumbing, electrical and other work. The National Contractors Association reports that about 7,000 new electricians enter the field each year, but 10,000 retire. The average age of plumbers and electricians in this country is just under 60, with the average U.S. retirement age at 62. There aren’t enough undergraduates enrolled in four-year trade institutions to make up for the shortfall coming soon. Forbes reports there were 10,328 students in 2018, but just 8,308 in 2021, according to the National Student Clearinghouse Research Center. Some HVAC and plumbing companies now offer signing bonuses to new employees the likes of which were once reserved for software engineers.  Labor shortages also can impact permit approval and inspection processes, creating longer turnaround times to complete claims.
• Natural disasters. Environmental damage like flooding and wildfire impacts the availability of building materials in two ways. First, it can slow imports from other regions or countries affected by disasters (currently the case with Canadian lumber). Second, it increases competition for available materials since most manufacturers serve the entire U.S. market. That means, for example, huge demand for replacement flooring, drywall and appliances in Florida following the devastation of Hurricane Ian can have ripple effects across the country.
• Remodeling boom. All that time spent at home during the pandemic (with no vacations, dining out or entertainment to spend their money on) got people thinking about home projects they’d like to complete. Forbes noted that home-improvement spending during the heart of the pandemic (2020, 2021) topped spending in 2018 and 2019. Interior painting, bathroom redos and new floors were popular, with luxury product choices accounting for 30% of industry growth. In addition, frenzied home buying – sometimes without an inspection – led to a parallel explosion in demand for new-purchase refurbishing. We’re still catching up from that, even though the housing market has cooled a bit.

What can I do to help my homeowners claim go more smoothly?

Reach out for help as soon as you notice damage.

If a claims expert isn’t available on the spot, someone will contact you promptly to discuss your claim. They’ll advise you on the claims process, verify the coverages that apply and work with you to resolve the claim. The more information you can provide, the better. Having the precise day and time the damage occurred, photos of the damage and your home inventory of damaged belongings will help jumpstart your claim.

Being proactive is more important now than ever.

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What should I do if I need to make a home claim?

1. Safety first. 

• Ensure that you and your family are safe.

• Call 911 for help, if needed.
• Stop the source of the damage (like turning off water to the house in case of a water leak), provided it’s safe for you to do so.

2. Report the claim . Not only does prompt reporting mean repairs can start sooner, we may be able to help limit the severity of the loss if we can quickly set you up with emergency assistance, for example, in drying up water damage. Depending on what caused the damage, prompt reporting also may help us recover our payments and your deductible.
3. Protect your property from future damage. This might include securing a broken door after a burglary or covering up your property to keep the rain out.
4. Keep records of any expenses related to the claim so that your adjuster can review them.