Mark Cuban says this will be the ‘No. 1 housing affordability issue’ for Americans — and predicts Florida especially will have ‘huge problems.’ 3 ways to protect yourself in 2025

Here’s why home insurance could be a pivotal problem for the national housing market in the years ahead.

Home insurance crisis

Home insurance rates have surged, driven primarily by two key factors: inflation and climate change.

The cost of labor and building materials for homes has risen rapidly since the pandemic. Although the price of lumber has recovered, the National Association of Home Builders says things like drywall, concrete and steel mill products are still selling at elevated prices.

For those with a replacement cost insurance policy, it can cost the insurer more to cover the cost of replacing your home, without taking depreciation into account. The risk this presents will be reflected in your premium.

While homes are more expensive to replace, they’re also more prone to damage because of climate change.

Severe floods, wildfires and hurricanes have become more frequent, which must be factored into the underwriting of property insurance. As a result, home insurance rates have surged 40% faster than inflation between 2017 and 2022, according to the Consumer Federation of America (CFA).

In fact, major insurers like Farmers and Progressive have either left states like Florida or limited their exposure to these disaster-prone regions. And based on CFA data from 2018 to 2022, 10% of Florida homeowners have no property insurance at all.