Inside the costly new reality of insuring a home in Texas
When Maryann McGregor retired in 2020, she and her husband considered downsizing and selling their four-bedroom home in Clear Lake to their adult son. The couple had lived there for nearly four decades, and the house was paid off.
Then their home insurance bills started to skyrocket. Two carriers stopped providing coverage, and Allstate, which had been charging them $3,300 in 2020, is no longer writing new policies in their zip code. Now they’re paying $8,000 for a policy from a little-known start-up. Their wind and hail deductible has jumped to $28,400 — twice what they paid to replace the roof last year.
McGregor worries about burdening her son with the new costs.
“It would be a huge impact on him to have that big insurance bill on top of the tax bills,” she said. “The insurance is more than the taxes now.”
Homeowners like McGregor are struggling in every corner of Texas to keep their homes insured, paying more for less coverage as climate change wreaks havoc on providers.
Home insurance in the state is now among the most expensive in the country, trailing only Florida and Louisiana, according to a Houston Chronicle analysis of U.S. Census survey data. Insurance carriers from Allstate and State Farm to smaller start-ups have responded to the rising frequency and intensity of storms not by pulling out of local markets en masse, as has happened in more regulated states like California, but by jacking up premiums and dropping homeowners in risky areas.
The Texas Department of Insurance recorded a 21% jump in statewide rates last year, the biggest annual spike in at least a decade. In the last five years, rates in Texas have risen faster than anywhere else in the country, based on data tracked by S&P Global.
The Houston metropolitan area has the highest average premiums in the state, according to the Chronicle’s analysis, with communities closest to the coast paying nearly three times the national average for home insurance.
But it’s not just a coastal crisis. Homeowners in Amarillo and Lubbock have seen their premiums surge from one year to the next as wind storms and wildfires rip across the panhandle and West Texas. Rates have soared in Central and North Texas too as softball-sized hail has shredded roofs and tornadoes have destroyed neighborhoods.
In the Dallas-Fort Worth area, home insurance last year ranked among the top 20 priciest in the country, topping every metropolitan area in California and many across the East Coast and Florida.
“We don’t have a healthy home insurance market anywhere in the state,” state Sen. Tan Parker of Flower Mound told lawmakers recently, noting that he was dropped by his provider earlier this year, and is now paying more than three times as much for coverage.
Zero denials
There are many reasons for the surging premiums. Inflation has led to rising construction and labor costs, making it more expensive to replace or repair a damaged home. The cost of reinsurance, which insurance companies buy to protect their own losses, has also increased as global losses skyrocket.
But by far, climate change has been the biggest driver. This year alone, the state has seen 18 billion-dollar weather events, according to the National Oceanic and Atmospheric Administration — the most on record in 40 years. Those included drenching thunderstorms, tornadoes, massive hail and straight-line winds — all of which are made stronger by a warming atmosphere.
“It’s easy to get frustrated with insurance. But what most people are usually actually upset with is math,” said Lars Powell, the director of the Center for Risk and Insurance Research at the University of Alabama. “The insurance company isn't a charity. It's got to recoup its losses with premiums.”
Paying too much on home insurance? Get a better rate today
Unlike in California and nine other states where insurers need approval to hike rates, in Texas, companies can begin using them as soon as they notify the state, a system called file-and-use. Insurance lobbyists say the Texas system, in place since 2003, enables a more competitive market, which is ultimately good for consumers.
Consumer advocates question whether companies are being adequately scrutinized. Because mortgage lenders require homeowners to carry insurance, it’s not a product people can freely choose — or forgo.
Article from:
https://www.houstonchronicle.com/projects/home-insurance/texas-home-insurance/
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