• The costs of labor and materials have risen significantly in the past two years and continue to rise, due to a construction labor shortage as well as new tariffs on materials.
• If these increased costs are not factored into insurance coverage in disaster-prone areas, homeowners will be left with huge losses that could even resonate through the mortgage market.
• If just 1% of the Southern California homes at risk were a complete loss in a wildfire, given the increase in reconstruction cost over the last two years (5.6%), the undervaluation would be $25 million.

Extreme weather, from floods to wildfires to high-category hurricanes, is causing ever more damage to neighborhoods. Now, new research shows that much of the nation’s housing stock may be underinsured against these disasters.

The cost of rebuilding has risen significantly in the past two years and continues to rise, due to a severe construction labor shortage as well as new tariffs on materials. If these increased costs are not factored regularly into insurance coverage in disaster-prone areas, homeowners will be left with huge losses that could even resonate through the mortgage market.