As if Louisiana homeowners didn’t have enough to worry about, a new financial threat is looming—one that could make already crushing insurance premiums even worse. With federal tariffs on imported goods now taking effect, industry experts warn that the cost of rebuilding homes after storms and floods is about to spike—along with homeowners insurance rates.
The reason? Replacement costs.
Tariffs Are Driving Up the Price of Building Materials
The latest round of tariffs imposed by the Trump administration includes steep increases on imported goods from China, Canada, and Mexico—three major sources of essential construction materials like lumber, steel, aluminum, insulation, drywall, windows, and roofing components.
According to the National Association of Home Builders, tariffs on Canadian softwood lumber alone have previously increased the price of a typical new home by thousands of dollars. When applied across an entire state prone to severe weather events, those added costs become massive liabilities for insurers.
Insurers Base Premiums on What It Costs to Rebuild—Not What You Paid
This is key: homeowners insurance doesn’t cover market value—it covers the cost to rebuild. And when the cost of nails, plywood, shingles, and HVAC units goes up 20% or more due to tariffs, your insurance premium is going up, too.
In Louisiana—where hurricanes, hailstorms, and flooding are an annual reality—these costs get passed down fast and hard. Insurance companies already stretched thin from catastrophic losses in recent years are using replacement cost inflation to justify steep premium hikes—or exiting the state altogether.
A Crisis That’s Already Happening
Louisiana homeowners have already been slammed by a retreating insurance market. Dozens of insurers have left the state or gone insolvent in the past three years, leaving residents with little choice but to turn to Louisiana Citizens Property Insurance Corporation—the state’s insurer of last resort.
As Big Easy Magazine previously reported, premiums in the region were already trending dangerously high. Now, with construction costs surging due to tariffs, insurance companies are re-rating policies again, citing increased exposure.
Expect to see:
• Higher premiums for standard policies
• Lower thresholds for coverage amounts
• Increased deductibles
• Fewer private insurers willing to write policies at all
A Perfect Storm for Middle-Class Homeowners
The end result? Middle-income families are being priced out of insuring their homes. In some parishes, homeowners are already paying $5,000 to $10,000 annually just to maintain insurance coverage. Add inflationary pressure on building materials, and even modest homes become expensive risks in the eyes of insurers.
And when people can’t afford coverage, they’re one storm away from total loss.
What Needs to Happen Now
Policy experts are urging state and federal leaders to acknowledge the ripple effects of international trade policy on insurance and disaster preparedness. There are calls to:
• Create tariff exemptions for essential construction goods
• Increase reinsurance support for Gulf Coast states
• Expand affordable coverage programs before hurricane season begins
Because without relief, tariffs on steel and lumber won’t just affect trade—they’ll make homes uninsurable for hundreds of thousands of Louisianans.
