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Takeaways from the Key Takeaways
- The cost of building homes and repairing them has increased in the last five years due to COVID-19-related supply disruptions and natural disasters. Insurance companies have also raised their rates accordingly.
- President Donald Trump's tariffs on materials used to build homes will push home repair costs even higher. Home insurance prices will also increase by 11% between now and 2025.
- It may take a year for insurance prices to reflect increases in material costs. When they do, homeowners can expect to pay an additional $106 per year.
President Donald Trump's tariffs are expected to make home repairs more expensive, likely pushing up homeowners' insurance costs.
The cost of building and repairing homes is expected to rise due to the various tariffs that Trump has proposed and implemented on wood, plastics and metals imports. Six out of ten builders surveyed by National Association of Home Builders reported that their suppliers had already increased the price of materials. Tariffs are estimated to raise the cost of building a typical home by $10,900.
In order to balance out the increased material costs, insurers are likely to accelerate the pace of price increases for home insurance. Insurify’s analysis shows that home insurance prices will rise by 11% by 2025. This is a three-point increase over the cost of insurance without tariffs.
Insurify estimates that the average homeowner will spend $3,626 on home insurance annually by the end the year, $106 higher than without tariffs.
Home insurance premiums may not increase immediately. Insurify reported that insurers often need to get regulatory approval before they can raise their rates, which could take months or even years.
Tariff-induced price increases will add to the already high cost of home insurance.
According to the Insurance Information Institute, supply chain interruptions due to the COVID-19 pandemic have increased the cost of repairing a home from 2019 to 2022 by 55%. Climate change has increased the frequency and intensity of natural catastrophes, increasing the costs of claims and forcing many insurers to raise their premiums.
Insurify’s separate report revealed that home insurance rates would increase by 8% in 2024.
