Lewis & Ellis, LLC

Texans see home insurance costs spiking

Property and Casualty Insurance
by Wes Campbell
Midwest still rebuilding after highly damaging derecho
Midwest still rebuilding after highly damaging derecho

Nationwide, millions of Americans may be concerned with the rising cost of home insurance and other types of necessary coverage they have to carry. However, residents of some states may have a slightly more difficult time than others, and this is true of Texas in particular. There, a series of major weather events did significant damage in recent years, raising the average home insurance rate significantly, to one of the highest levels seen nationwide.

Recent data suggests that Texas now has the third-highest annual home insurance costs in the nation, at $1,745 per year, according to a report from Austin television station KXAN. Only Florida and Louisiana, which themselves have been pummeled by major storms in the last decade, are ahead of the Lone Star State in this regard. More worrisome for many homeowners in Texas, though, is the fact that those premiums have risen by more than 26 percent from 2010 to 2014 alone.

What's happening?
Mark Hanna, spokesperson for the Insurance Council of Texas, told the station that even Texans whose homes were not damaged by any of these major incidents are likely seeing increases in the cost of their coverage, the report said. The fact of the matter is that this is driven by costs for the entire state in a lot of cases, but moreover the risk that any type of incident - such as a hurricane or tornado, wildfire or flood, hail or drought - could befall a property in a given area is likewise going to drive up the price of coverage as well.

Indeed, in the first half of the year alone, Texas home insurance companies passed along some $1.8 billion in losses, the report said. The Texas Department of Insurance must approve all proposed rate increases from insurers, but there have been so many adverse weather events there in the last several years that none of this appears to be something akin to price gouging.

Storms in Texas could be growing more common, and severe.Storms in Texas could be growing more common, and severe.

What's next?
And unfortunately for Texans concerned about these higher costs, it does not appear as though the increases are likely to slow down any time soon, the report said. Just like any other state, insurers are now bracing for the weather events they deal with to be even larger than they have been in the past - in keeping with the recent climatological trends - and could therefore increase rates on a more speculative basis as well, just to protect them from potential risks for which they were not fully prepared.

However, it might also be important for property and casualty insurance companies to do a little more work when it comes to communicating with people about the risks they face, and why their coverage costs are going up. Often, consumers may just get larger bills and not know why, but with a little extra education effort about the potential problems that could end up impacting them, they might be more willing to accept these higher rates without a fuss.



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