Home insurance rates are a piece of the puzzle that today's housing industry must consider as it begins emerging from the mortgage crises that have flattened the economy. It isn't as if insurance costs play an overly critical role in what's taking place in the housing market, but there are some issues that do appear in need of lenders and buyers attention.

Technology has made tremendous strides in helping exercise the home valuation process—but many challenges remain. There is evidence that shows current trends in housing markets and the construction industry have put many properties in danger of being underinsured, just the same as homeowners who reduced their insurance coverage in order to counter the recession's impact. This isn't good news. It creates a shaky situation because it puts many policyholders in danger of having to take on more risk if their property is destroyed by some catastrophic event.

One result of the more risk acceptance shouldered by policyholders is that rebuilding cost data and analytical methods – both invaluable aids – aren't brought fully into play. They were created to give policyholders vital information about potential risks and what to expect based on reliable insurance-to value estimates that can help protect their investments.

Rebuilding or selling a home during the past three years has been a difficult proposition. Property values have steadily fallen, but reconstruction costs have continued to rise. That spells uncertainty for insurance companies who must set homeowner policy rates at levels they anticipate will provide adequate coverage, while making a profit for the insurance industry. A nationwide study of the costs associated with rebuilding or rehabilitating properties rose 0.96 percent across the board in 2009.

Hurricanes have definitely had an impact on the housing industry. Home insurance rates along the Southeast corridor have increased substantially because of the economic consequences created by hurricanes in 2004 and 2005. Some insurance companies have even gone so far as to stop selling homeowner's insurance because the risk is too high. What's happening in this area cannot be good for its economic activity, nor does it encourage rebuilding at costs that can only be guessed at.

What's happening in the home insurance industry isn't making businesses and homeowners happy. Almost every day local media stories are told about how individuals have to pay premiums that can be four times as much as their original costs. It's a situation that most homeowners cannot avoid because their mortgage holders demand insurance be provided to protect their investment.

The bottom line for all these problems is that expensive homeowner's insurance could really blunt what has been a thriving housing industry.