Should CPI be Revised to Include Homeowners' Insurance?

According to the Bureau of Labor Statistics, spending by renters on tenants’ insurance policies is included in the Consumer Price Index – the most well-known indicator of inflation; whereas spending by homeowners on homeowner’s insurance is not included in the CPI calculation. In a recent article published by Bloomberg, soaring home insurance premiums could have added about 0.8% to last year’s CPI increase of 3.4%. Contrast that with renters’ insurance only accounting for 0.01% of the overall increase in CPI last year.

It's no secret that more extreme wildfires in the West, convective storms in the Midwest, and hurricanes in the Southeast have increased in recent years and with that insurers have incurred higher costs and increased payouts for claims. The average cost of a homeowners policy last year was $1,905 versus $1,272 in 2019, a 50% increase. Home repair expenses have been steadily on the rise since the onset of the Covid-19 pandemic, and according to the Verisk Remodel Index, the cost of home repairs and remodeling have increased in all 31 categories they measure over the last year – for example the cost of doors rose 16.6% in the last quarter of 2023 and the cost of tile rose 27% on an annual basis.

So as many of you have probably seen and experienced with your own home insurance policy, the increased premiums are real and significant. This begs the question: should CPI be revised to include the cost for homeowners’ insurance to better reflect the rising costs to our economy? ?