Tariffs on Construction Materials Could Raise U.S. Home Insurance Premiums in 2025

In 2025, U.S. homeowners face an increase in home insurance premiums due to tariffs on imported construction materials. Insurify projects that tariffs could add approximately $106 to the average annual cost, raising the national average home insurance premium to $3,626 by year-end. This increase stems from higher costs of rebuilding homes caused by tariffs, which insurers factor into premium calculations. Though home builders primarily use domestic materials, about $14 billion worth of residential construction materials were imported in 2024 from countries including Canada, Mexico, and China, impacting costs. The National Association of Home Builders reports that 60% of builders have experienced or anticipate tariff-driven price hikes, estimating a $10,900 average increase in construction costs per home. Tariffs have also prompted increased personal property coverage needs, particularly for appliances, 34% of which are imported, affecting premiums further.

Insurify’s analysis anticipates tariffs will accelerate home insurance premium growth from an 8% to an 11% year-over-year increase. States will experience varying impacts, with Florida projected to see the largest dollar increase of about $464, while states like Vermont face smaller increases. The tariffs contribute to supply chain disruptions, mirroring pandemic-era challenges, which have already driven replacement costs up 55% between 2019 and 2022. Industry experts highlight that tariff impacts on home and auto insurance rates could surpass those seen during the pandemic’s early years.

Supply chain reliance on China, Canada, and Mexico is significant, with these countries supplying nearly half of imported construction materials. Policy responses include calls to boost domestic lumber production to alleviate supply shortfalls. However, increased production gains may take considerable time to influence market prices. Furniture imports, amounting to $25.5 billion in 2024, are also affected by tariffs, influencing personal property insurance costs.

Homeowners are not likely to see immediate premium hikes as insurers require regulatory approval for rate increases, a process that can take several months to years. Renewals are expected to reflect tariff-driven cost increases starting late in the year or into the next. Those paying insurance via mortgage escrow accounts may face underfunded escrow balances if rates rise, underscoring the importance of reviewing renewal documents closely.

Consumers can potentially mitigate cost increases by comparing insurance offerings and exploring available discounts. Insurify’s projections are based on real-time data from a broad range of insurers and consider regional loss-ratio trends, including recent wildfire impacts in California. Adjusting for tariff effects involved increasing dwelling coverage limits by about $11,000 and personal property coverage by $2,250 in modeling.

Overall, tariffs on construction materials are a significant new factor in the home insurance cost landscape, compounding existing upward pressures from previous supply chain constraints and natural disaster claims. The situation underscores the interconnectedness of trade policies, construction markets, and insurance pricing, highlighting the need for industry stakeholders to monitor regulatory developments and market responses closely.