Texas home insurance rates continue to climb and remain the highest in the country. There are two broad reasons most insurance companies give for our high rates; weather and increases in the cost of claims. With that in mind, I thought it was time to revisit the top four home insurance claim types, as well as where they are occurring geographically.
The top four types of home insurance claims as reported in a 2012 Texas Department of Insurance study are hail, water damage, hurricane winds, and fire. Here’s how they compare based on claims paid by insurance carriers:
- Hail – $7.6 billion in losses
- Water damage $7.3 billion in losses
- Hurricane winds – $6.2 billion in losses
- Fire – $4.3 billion in losses
Everything’s bigger in Texas, including our hail. Most of us don’t bat an eye when pea size hail occurs, but we all tend to run for cover when it gets bigger than a golf ball. As we saw in the two storms that hit the Dallas / Fort Worth area in 2012, hail that is the size of a tennis ball or bigger can do some major damage.
Water damage typically encompasses water leak that occur within the home. These include leaks where a pipe may spontaneously burst due to a freeze, a failure of a water heater, or an appliance such as a dishwasher. Flood damage falls into its own category since no home insurance policy covers flood damage.
Texas also experiences the occasional hurricane. The last major one was Hurricane Ike which struck Galveston September 2008. Ike’s impact was huge when considering damage to real estate, infrastructure, and agriculture. The total cost of Hurricane Ike was $12 billion consisting of $10 billion in wind damage and $2 billion in flood damage.
The last major outbreak of fires in Texas occurred in 2011 when hundreds of thousands of acres ignited in one of the state’s worst droughts. The cost just to fight the wildfires was nearly $200 million.
Where these claims occur is also interesting. The Texas Department of Insurance divides the state into six geographic regions and then ranks them based on home insurance premium and average losses.
- The coastal counties ranked highest
- The counties just beyond the coastal counties were ranked second highest
- Tied for third were north Texas (includes D/FW) and the Panhandle
- Central and east Texas were ranked fifth highest
- Least costly were south, southwest Texas and the El Paso area
The factors outlined for their impact on insurance premiums are:
- Coastal counties and counties just inland from the coast – hurricanes, high winds & water
- North Texas and the Panhandle – risk of severe thunderstorms, tornadoes & hail
- The risk for wind, tornadoes & hail diminishes with the bottom two areas
The two things to keep in mind if you are a homeowner in Texas are, where you live impacts the premium you pay for home insurance. In addition, if you’re curious about what your upcoming renewal will be look back at the weather we’ve experienced in the last 12 months.
What do you think? Share your comments, questions, and thoughts with us in the comments section of our blog, or on our Google + and Facebook pages. I’d love to hear from you!