Home Insurance Rates Rise Even as Property Values Sink

In a year that's been rife with tornadoes and severe thunderstorms, premiums for homeowners insurance are on the rise. And forecasts are calling for a hurricane season that will be more active than usual. Insurers may try to boost rates by as much as 20 percent in areas where storms hit hardest.

Don't look for a break because the value of your home has fallen. Premiums are tied to the cost of rebuilding a home -- not its current market value -- so skimping on coverage because your home's value has shrunk could leave you underinsured. It doesn't help that rebuilding costs have been increasing: As of late spring, the overall producer price index for construction materials was up 7.5 percent for the previous 12 months.