Texas home insurance rates continue to climb and remain the highest in the country. The two reasons most insurance companies give for Texas having the highest rates are weather and the cost of claims. The top four types of home insurance claims as reported in a Texas Department of Insurance study are hail, water damage, hurricane winds, and fire. The combined total insurance companies paid out in claims was over $25 billion. Individually, hail claims accounted for $7.6 billion, water damage was $7.3 billion, hurricane winds was $6.2 billion and the amount paid for fire claims was $4.3 billion.
Everything’s bigger in Texas, including our hail. Most of us don’t bat an eye when pea size hail occurs, but we all 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 claims encompass water leaks which occur within the home. These include leaks where a pipe may spontaneously burst due to a freeze, a water heater failure, or an appliance such as a dishwasher. Flood damage falls into its own category and 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.
There are other forms of wind damage that Texans experience including tornados and straight line winds. Over the last two years, north Texans have seen homes damaged by both types of winds.
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. Next week, we’ll look at how these claims and their corresponding payments are impacting home insurance for Texas home owners.
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