🏡 Balancing Housing Affordability and Policyowner Resilience: Bridging Exposure Gaps Amidst Federal Policy Rollbacks
The current policy and economic landscape present homeowners with significant challenges, simultaneously threatening housing affordability through rising construction costs and complicating policyowners' ability to achieve full indemnification following natural disasters. The discussion spans federal legislative rollbacks (OBBBA), economic protectionism (tariffs), and critical debates over consumer representation in insurance claims.
I. The Policy Storm: OBBBA and Tariffs Undermine Housing Affordability
The resilience of the housing market is currently compromised by federal policy changes that escalate construction costs and strain household finances, creating a chronic affordability crisis.
A. The Cost Barrier: Upstream Protectionism
Aggressive U.S. tariffs implemented through upstream protectionism are severely impacting the construction industry by inflating the cost of essential intermediate inputs.
Material Price Spikes: Tariffs imposed in 2025 on plumbing and HVAC imports, particularly those from Asia, have resulted in price hikes of 15% to 35% across essential materials and finished goods. This turbulence creates sourcing disruptions and unpredictable project timelines for contractors.
Increased Home Costs: Tariffs on materials like lumber, gypsum, and steel are projected to add approximately $135 billion to residential construction costs over five years. Recent tariff actions alone are estimated to add an average of $10,900 to the cost of constructing a new single-family home.
Inflationary Pressure: The Congressional Budget Office (CBO) expects these tariffs to raise national inflation by 0.4 percentage points in both 2025 and 2026.
B. Regulatory Instability via OBBBA
The One Big Beautiful Bill Act (OBBBA, or the Reconciliation Bill) exacerbates affordability challenges by raising costs and threatening critical safety nets.
Increased Household Energy Costs: OBBBA repeals or phases out key clean energy tax credits (like 30D and 25C) established under the IRA, projected to substantially increase annual household energy costs for American families, reaching an average of $371 in 2035 nationally.
Threat to Power Reliability: Energy industry leaders warn that slashing these tax credits risks chilling investment in clean power, threatening U.S. power reliability.
Safety Net Cuts: The CBO confirms that OBBBA makes the largest proportional gains for the wealthiest while resources decrease for households toward the bottom of the income distribution, including massive cuts to federal and state in-kind benefits, primarily Medicaid and SNAP.
II. Policyowner Resilience: Indemnification and Bridging Exposure Gaps
Amidst economic instability and severe weather, homeowners' primary defense—insurance and expert representation—is under intense scrutiny and faces legal exposure gaps.
A. The Role of the Public Adjuster (PA)
Public adjusters represent the insured property owner, offering expertise in assessing losses, filing claims, and negotiating payments with the insurer.
Fee Caps and Access to Expertise: Legislative proposals include optional language to limit PA compensation to 10% for catastrophic claims and no more than 15% for any settlement. Critics argue a 15% cap would make low-value claims (like automotive collision) economically unfeasible for PAs, effectively removing expert consumer resources.
Insurers' Claims Handling Abuse: Consumers retaining PAs are frequently subjected to unfair practices, including the widespread practice of undervaluing claims through photo estimating and virtual handling, sometimes resulting in insurance repair estimates that are deficient by up to 85%.
B. Bridging Policy Gaps: The Assignment of Benefits Debate
Assignment of Benefits (AOB) allows repair contractors to pursue fair payment directly from the insurer when a claim is undervalued.
Threat to AOB: Policy proposals seek to explicitly prohibit post-loss assignment of benefits or proceeds to anyone other than a licensed PA or an attorney. Consumer advocates argue that removing AOB substantially harms consumers, forcing them to pay out-of-pocket for repair shortfalls.
Conflict of Interest: New licensing standards strengthen conflict of interest provisions, generally prohibiting a PA from having a financial interest in the reconstruction/repair of damaged property, other than their contracted fee. This prohibition conflicts with proposals allowing PAs to receive an assignment of contract benefits.
III. Leveling Regulatory Changes: Advocacy and Institutional Solutions
Institutional experts and advocates are pushing for reforms to protect communities against OBBBA's regressive cuts and rising costs.
A. Institutional Advocacy and Legislative Reform
Protecting the Consumer Safety Net: The NCLC focuses on the detrimental impact of OBBBA, specifically the massive cuts to Medicaid and the reduction in maximum CFPB funding, which is critical for curbing predatory lending.
Housing Supply Solutions: Groups like NAHREP advocate for tariff relief on critical homebuilding materials. CAP proposes initiatives like launching ARPA-Home to fund modular construction, modernizing HUD building codes (saving $5,000 to $10,000 on manufactured homes), and establishing the Rent Relief for Reform (R3) program.
Insurance Resilience: To address rising premiums and insurer exits, CAP recommends a federal reinsurance program to support state insurers of last resort (FAIR plans).
B. PA Licensing and Contract Transparency
Pennsylvania is actively updating its Public Adjuster Licensing Law (H.B. 1972 and S.B. 1074) to align with national standards and strengthen consumer protections:
Disclosures and Right to Cancel: Mandatory disclosures and a window of time (e.g., three business days) to rescind the contract.
Conflict of Interest: Strengthening prohibitions on PAs receiving financial benefits from contractors.
Financial Responsibility: Increasing the minimum bonding requirement for PAs to be licensed.
Limiting Unlicensed Activity: Ensuring that no person can represent or advertise themselves as a public adjuster without a license.
These measures aim to ensure professional advice and representation for homeowners facing disaster is reliable, transparent, and ethically grounded.
