How U.S. Steel Tariffs Could Impact Home & Business Insurance Costs in 2025

Insurance rates were showing signs of stabilizing, but new tariff threats could change that trajectory.

The U.S. is once again considering tariffs on imported steel and aluminum. While this might seem like an issue that only affects large businesses, history tells us otherwise. When similar tariffs were imposed during President Trump’s first term, steel and other construction material costs rose sharply. The situation worsened with COVID-19 and supply chain disruptions, leading to some of the most expensive years for building and rebuilding in recent memory.

Now, with 2024 marking a record-breaking year for catastrophic insurance claims in Canada—along with devastating wildfires in California and a tightening reinsurance market—homeowners and businesses alike could be in for a tough ride.

But how much of an impact will these tariffs really have? While rising construction costs could add pressure to insurance rates, they are just one factor in a broader trend of increasing premiums.

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Why Steel Tariffs Matter for Insurance Costs

Steel and aluminum are key materials in modern construction, from high-rise office buildings to the beams and framing that hold up your home. If tariffs increase the cost of these materials, the cost of new construction, repairs, and rebuilding after disasters could rise as well.

Here’s where insurance comes in:

1. The Cost to Rebuild Goes Up – Whether it’s after a fire, storm, or flood, insurers base coverage on the cost to repair or rebuild your property. If materials cost more, claims cost more—and those costs often trickle down to policyholders.
2. Home Insurance Premiums Could Rise – Insurance companies adjust pricing models to reflect higher rebuilding costs. Homeowners could see rate increases, even if they haven’t filed a claim.
3. Commercial Properties and Condo Buildings May See Stricter Policies – Large-scale repairs for office buildings, rental properties, and condo towers require a lot of materials. Insurers might adjust their underwriting, increase deductibles, or charge higher premiums to account for rising costs.

That said, not all insurance claims require large amounts of steel or aluminum. Residential home claims often involve lumber, drywall, and roofing materials, which may not be affected as much. If alternative suppliers step in to offset tariff-related price spikes, the overall impact may not be as severe as expected.

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A ‘Perfect Storm’ for Insurance Rate Increases—With or Without Tariffs

If rising construction costs were the only problem, insurers might be able to absorb some of the impact. But tariffs aren’t the only issue driving insurance rates up.

2024 was the most expensive year for insured losses in Canada’s history. Between wildfires, floods, and severe storms, insurers paid out approximately $8.55 billion in claims. Add to that the ongoing wildfires in California and other global natural disasters, and reinsurance costs—what insurers pay to cover their own risks—are also rising fast.

What does this mean for policyholders?

1. Insurers Are Being More Cautious – Some companies may reduce coverage in high-risk areas or require stricter underwriting, making it harder to obtain or renew coverage.
2. Premium Increases Are Likely – Many insurers have already signaled that 2025 and 2026 will bring across-the-board increases.

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3. Less Flexibility for Homeowners – With rising costs, policyholders may need to review their coverage limits, adjust deductibles, and explore risk mitigation strategies.

Even if these tariffs don’t happen, rebuilding costs remain high, and insurers are still adjusting rates based on catastrophe losses, reinsurance pricing, and claims trends.

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What Can Homeowners and Businesses Do?

While there’s no way to stop rising costs, there are steps you can take to protect yourself from sudden increases:

1. Review Your Policy Limits – Ensure your insurance reflects current rebuilding costs so you’re not underinsured.

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2. Ask About Discounts – Some insurers offer savings for homes with updated roofs, fire-resistant materials, or security systems.

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3. Plan for Higher Deductibles – A higher deductible can help offset premium increases, but make sure it’s still manageable in the event of a claim.

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4. Be Proactive with Risk Mitigation – Regular maintenance, keeping property clear of fire hazards, and investing in weather-resistant materials can help reduce claim risks.

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5. Obtain a Replacement Cost Appraisal – This ensures your coverage values are up to date and aligned with current construction costs

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Final Thoughts

The combination of tariffs, inflation, and increasing insurance losses is setting the stage for a challenging few years in the insurance market. While new tariffs could make rebuilding more expensive, they are just one piece of the puzzle—and rising rates were likely coming regardless.

At Scrivens Insurance, we’re monitoring these industry shifts to help our clients stay protected. If you have concerns about your policy or want to explore coverage options, contact us today. Our team is here to help you navigate these uncertain times.

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