Summer’s here and while our hail storms are probably behind us, its impact continues to unfold for homeowners in the Dallas / Fort Worth metroplex and San Antonio. Home insurance companies paid an unprecedented amount in claims and tallied up losses from the storms. The impact goes beyond insurance companies balance sheets, it’s being felt by homeowners and buyers in both north and central Texas as insurance companies consider their options. The responses include moratoriums, increased deductibles, increased rates, and coverage shifts.
Moratoriums: A moratorium, as I addressed in a recent post is when an insurance company ceases writing new policies for a specific reason and period of time (see https://wiseinsurancegroup.com/tropical-storm-cindy-causes-insurance-moratoriums-along-gulf-coast/ for more info). One of our smaller carriers has issued a moratorium stating they will not issue new home insurance policies in Dallas, Tarrant, Denton, and Collin counties until further notice. This is a drastic measure that will not impact homeowners but may impact a small number of buyers. I don’t see, nor expect, any other companies to follow their lead.
Deductibles: A couple of smaller home insurance companies moved their wind / hail deductible from 1% to 2%. This happened last year so I was not surprised to see it repeated this year. Last year, this was a short-term move, though I believe more companies will consider implementing this over time. This is currently being done by some companies when they write the home insurance policy without the accompanying car policy. Others increase the wind / hail deductible from 1% to 1.5% or 2% when the roof is older than 9, 10, 15 years, etc.
Rates: Home insurance rates across north and central Texas have increased. I’ve seen some rates jump 20% to 30% in zip codes from Justin to Murphy, Texas due to the hail claims this and last year. I expect rates to continue to climb in zip codes which are more hail prone than others. This impacts all homeowners in these areas, whether they filed a claim or not. I believe the long-term trend is rates will continue to rise until we experience two or three years of little to no hail.
Coverage: Most carriers have implemented subtle shifts in home insurance coverage over the past few years. Some carriers will write a home with a metal roof but exclude cosmetic damage caused by hail. Others will limit their exposure by either not writing a home with a roof over 15 years old or only doing so on an actual cash value or depreciated basis instead of replacement cost.
A couple of companies have introduced depreciation schedules based on the age of the roof. Each year a roof ages, the company pays a lower percentage of the replacement cost until the roof is not covered at all. I’m not crazy about this coverage, but at least they are publishing their depreciation schedules so policyholders will know the financial impact before they file a home insurance claim for hail damage.
The future should be interesting as home insurance companies grapple with how to deal with hail in Texas. I expect we’ll see more companies raise rates or deductibles, and tweak coverage in the coming year. It’s important for homeowners to compare their home insurance every two or three years instead of getting locked in to one company. As an independent insurance agent, I can at least advise a client of a better option to consider when we review their policy. What do you think? Share your thoughts, questions, and experiences with me on my Facebook, Google +, or LinkedIn page. I’d love to hear from you!