Several months ago, I had the pleasure of hearing Dallas Morning News columnist, Dave Lieber, aka The Watchdog, speak to the Dallas Business Lunch & Learn Group. It was an informative and heartwarming speech on Dave’s life and some of the topics he’s written about with the Dallas Morning News and Fort Worth Star Telegram. I have started reading his column. He recently wrote one on a home insurance discount I thought should be shared here.
Home insurance companies provide a number of discounts. There are discounts for married couples, retired couples, homeowners with monitored alarms, new roofs, newer homes, updates to plumbing, electrical, and cooling systems, and for placing your car insurance with the same company too. In most cases, these discounts are given for something you do or have, not for giving something up. The home insurance discount Dave wrote about though was for something a policyholder gives up.
Apparently Texas Farm Bureau (TFB) has applied to the Texas Insurance Commissioner for permission to give homeowners a 10% or 25% discount in certain counties if they agree to not sue the company. Instead of suing Texas Farm Bureau, policyholders agree to handle any dispute through mediation with a mediator that TFB picks out. The reasoning for this proposed offer is TFB believes the attorneys and lawsuits that follow claims arising from large storms may prohibit them from writing home insurance in those counties in the future.
These discounts will not be offered statewide. TFB wants to provide a 10% discount to Aransas, Brazoria, Calhoun, Chambers, Galveston, Jefferson, Matagorda, Refugio, and San Patricio counties. The counties which will be offered a 25% discount include Brooks, Cameron, Duval, Hidalgo, Jim Hogg, Jim Wells, Kennedy, Kleberg, Nueces, Starr, Webb, Willacy, Zavata, and Zapata. The counties in both groups are located either along Texas’ Gulf Coast or in south Texas, counties with either high number of lawsuits or subject to hurricanes. No county in the D/FW area will be offered such a discount.
Many people in these counties will be tempted to take the discount. I don’t blame them as Texas home insurance rates are among the highest in the country. These homeowners probably believe they won’t sue Farm Bureau because their claim will be handled fairly. Most claims are handled fairly by most insurance companies, but there are times when they aren’t. State Farm was sued by two sisters in Mississippi after Hurricane Katrina for attributing the damage to their home was caused by tidal surge which isn’t covered by their home policy instead of wind damage which is covered. Part of their claim is that State Farm pressured engineers to claim it was tidal surge.
Consumer advocates are concerned that arbitrators will tend to side with the insurance company because they know who butters their bread. Their fee will be paid by the company. Will that result in decisions that are favorable to the company and not the homeowner? These advocates are concerned other insurance companies will follow in TFB’s steps and offer similar discounts to homeowners in these counties and others across Texas.
What do you think? If you believe this home insurance discount shouldn’t be offered, send an email to commercialpc@tdi.texas.gov and share your thoughts and questions with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!
