How Home Insurance in Oklahoma City Keeps Up with Inflation

When Matt and Jessica bought their Oklahoma City home a decade ago, they felt confident in their homeowners insurance policy. They had a comfortable amount of dwelling coverage, making sure they could rebuild if disaster struck. But when a severe storm damaged their roof last year, their insurance payout didn’t cover the full cost of repairs. Construction prices had skyrocketed, and they hadn’t updated their policy to keep up with inflation.
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Many homeowners don’t realize that the cost of rebuilding a home can change dramatically over time. If your policy is based on outdated figures, you could be left paying thousands of dollars out of pocket after a major loss. Understanding how replacement costs, policy limits, and coverage adjustments work can help protect you from financial surprises.

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How Inflation Impacts Rebuilding Costs

Over the past few years, rising inflation has affected nearly everything—including the cost of rebuilding homes in Oklahoma City. From lumber and drywall to labor and roofing materials, construction prices have surged, leaving many homeowners underinsured.
Some factors driving up rebuilding costs include:

• Higher Construction Costs – Materials like wood, concrete, and steel are more expensive than they were even a few years ago.
• Labor Shortages – A lack of skilled construction workers leads to longer timelines and increased costs.
• Supply Chain Issues – Delays in shipping materials mean higher prices for contractors and, ultimately, homeowners.
• Severe Weather Damage – Tornadoes, hailstorms, and high winds can drive up demand for repairs, increasing prices.

Replacement Cost vs. Actual Cash Value: What’s the Difference?

When choosing home insurance coverage, you’ll often hear the terms replacement cost and actual cash value. They may sound similar, but they offer very different levels of protection.
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• Replacement Cost Coverage – Pays to rebuild your home with materials of similar kind and quality, without deducting for depreciation.
• Actual Cash Value (ACV) – Pays out the value of your home or belongings at the time of the loss, factoring in depreciation.

For example, if your 10-year-old roof is damaged in a hailstorm, replacement cost coverage would pay for a new roof, while ACV would only reimburse you for what the roof is worth today—much less than what it costs to replace it.

How to Ensure Your Policy Keeps Up with Inflation

Many homeowners insurance policies include an inflation guard endorsement, which automatically adjusts coverage to keep pace with rising costs. However, these automatic increases may not be enough to fully cover your home’s rebuilding costs. Here’s how you can stay protected:

1. Review Your Policy Annually

Set a reminder to go over your policy each year with your insurance agent. If material and labor costs have risen, you may need to increase your policy limits.

2. Get a New Replacement Cost Estimate

Your home’s replacement cost is not the same as its market value. Work with your insurance provider to get an updated estimate on what it would cost to rebuild your home from the ground up.

3. Consider Extended or Guaranteed Replacement Cost Coverage

Some insurance companies offer policies that go beyond standard replacement costs:

• Extended Replacement Cost – Covers a percentage over your policy limit if rebuilding costs exceed your coverage.
• Guaranteed Replacement Cost – Covers the full cost of rebuilding, regardless of inflation or market changes.

4. Update Your Coverage After Home Improvements

If you’ve renovated your kitchen, added a new room, or upgraded your roofing and electrical systems, your home may be worth more than when you first purchased your policy. Make sure your insurance provider adjusts your coverage accordingly.

​What Happens If You’re Underinsured?

If your homeowners policy doesn’t cover the full cost of rebuilding, you may have to:

• Pay out of pocket – Covering the difference between what your insurance pays and the actual rebuilding cost.
• Downsize your home – Rebuilding a smaller or less expensive version of your original home.
• Delay repairs – Waiting until you can afford to make necessary fixes, leaving your home vulnerable to further damage.

How Oklahoma City Homeowners Can Stay Ahead

Homeowners in Oklahoma City and surrounding areas—like Edmond, Norman, and Yukon—need to stay proactive about their insurance coverage. Given the region’s severe weather risks, keeping policies updated is key to avoiding unexpected costs.

If it’s been more than a year since you last reviewed your homeowners insurance policy, now is the time to check if your coverage meets today’s rebuilding costs. Oklahoma Insurance Professionals can help you assess your policy and make necessary adjustments so that you’re fully protected.

Protect Your Home with the Right Coverage

Rising costs don’t have to leave you unprotected. By staying informed and working with a trusted insurance agent, you can make sure your home insurance policy is up to date and ready for whatever comes next.
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Need an expert to walk you through your options? Oklahoma Insurance Professionals proudly serves homeowners throughout Oklahoma City, Edmond, Norman, Moore, and beyond. Contact us today to discuss your coverage and get a personalized insurance review that keeps your home and finances secure.

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Scott Godwin
Founder

Oklahoma Insurance Professionals LLC serves Oklahoma City and the surrounding Oklahoma communities by protecting the people we work with just like we protect our own family members. Home insurance, auto insurance, business insurance, and more. We can help you find the coverage you need. ​​​